The chief executive of mydeposits has hit back at a Which? report calling for reform – or possibly even replacement – of the deposit system for private rental tenants.

Eddie Hooker says that since their introduction 12 years ago, Tenancy Deposit Protection schemes have consistently delivered a good service for the majority of tenants.

“I recognise that the systems and processes of deposit protection may need updating to deal with today’s rental market [but] having carried out extensive research I do not believe that overhauling the current system in favour of, for example, no deposit insurance alternatives, offers any greater protection for tenants” he says.

Hooker concedes that there is an affordability issue for tenants, particularly those in London having to find on average £2500, and that this must be addressed.  

“However, purchasing an insurance policy which reimburses a landlord if the tenant cannot or will not pay any losses, simply buys the tenant out of having to pay a deposit and could place tenants is a worse situation some years down the line” he says.

Hooker adds that ultimately tenants are still liable for recompense to an insurance company which many tenants simply do not realise. 

“The fees and/or premiums charged over a 10 year renting period, could end up costing the tenant £6,000 to £7,000 for nothing. What many don’t understand is that deposits are refundable if the tenant abides by the terms of the tenancy agreement. Insurance premiums are not” adds Hooker. 

He suggests that any proposed change to the current TDP system should recognise and embrace the existing benefits, such as Alternative Dispute Resolution, but be enhanced.  

“Options such as deposit loans, custodial only schemes or deposit passporting could address affordability issues and offer tenants greater control, while continuing to give landlords the confidence to remain in the buy to let market.”