Only one in five agents and not one single landlord believes that tenancy deposit schemes have been designed in their favour.
But while most believe that the schemes are stacked in favour of tenants, fewer than half of tenants even knew that the schemes exist or whether their deposits had been protected.
The findings emerge from a new survey of landlords, agents and tenants by digital inventory provider Imfuna.
It found that while a startling zero per cent of landlords said they felt that deposit schemes are designed in their favour, 35% claimed that neither they nor their tenants benefit from the schemes.
Letting agents also largely mirror that sentiment: only 20% said the schemes favoured landlords and 52% said the balance has been tipped in favour of tenants. A further 22% felt that the schemes benefit neither party.
The statistics have emerged after new parts of the Localism Act came into effect on April 6. The new Act means all landlords now face large fines of up to three times the deposit if it is not registered correctly within 30 days, and the prescribed information not given.
Imfuna creator Jax Kneppers said: “The survey presents a picture of landlord disenchantment with the deposit schemes.
“The fact that not a single landlord surveyed felt they were designed in their favour, shows that there is still some work to be done by all parties in order to democratise the inventory process and ensure that everyone involved feels they are supported in equal measure.”
Overall awareness of the deposit schemes was found to be high among landlords (99%) and lettings agents (88%). Tenant awareness levels were much lower, however, and only 43% were aware of the schemes before their tenancy began.
This lack of knowledge translated into the take-up of the schemes: nearly half (49%) of the tenants surveyed claimed they have not taken part in a deposit scheme.
While the schemes make much of their dispute resolution services, just 37% of landlords, compared to 78% of tenants, believe deposit schemes are an effective tool for minimising conflict.
Kneppers said the finding that only 19% of landlords and 36% of letting agents believe deposit schemes reduce the time taken over disputes, indicates that the process still isn’t working.
Nearly half of letting agents (48%) and 30% of landlords reported that they have settled individual disputes privately, without the aid of a deposit scheme.
The survey was based on telephone interviews with 1,000 tenants, 100 landlords (owning 20-plus properties or more) and 50 letting agents during February.
* What do you think about deposit protection services? What is best practice when it comes to inventories? The topics will be hotly debated at the Property Business Show next week – the brand new national event for agents.
www.propertybusinessshow.co.uk
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Comments
@ IO
We couldn't afford to turn down business on that basis, I can understand the 'big boys' doing it but they are making considerably more than most.
I take your point regarding volume, unfortunately with a few over 500 properties managed we are a long way from being able to dictate mandatory inventories to landlords. I must crack the whip a bit harder!
Ray
The HomeLet analogy was not good for them becaue they were doing precisely the wrong thing.
The compulsory inventory is easily dealt with, in the Landlord Contract. If the Landlord says "no" fine then they take their property elsewhere.
It is all about volume, like not wanting to take on a particular property but doing so if the Landlord will pay 16% - you need volume to dictate terms (like Right Move!!)
@IO
I think you misunderstand me, I don't question the need for an inventory at all, in fact I've been quite vociferous in my support for better inventories over the years, and if I could find an independent supplier that does as good a job as they say I might consider using them. The last one we tried was so amateurish as to be laughable; 3 spelling mistakes in the address alone and two rooms missing amongst other! That was a 'qualified - full member' inventory clerk
My question to EW was how they make it mandatory for a landlord to have one in place?. More to the point how do they handle it when the landlord says I don't want one? sue him for breach of contract? disinstruct themselves? report him to who for not having an inventory?
Adding it in as part of your service to a landlord, and charging for it, is one thing; making it mandatory is something different. I don't think they can have any legal basis for treating an inventory in the same vein as say and EPC or Gas Safety
Your analogy of making tenants take out contents insurance is probably not the best choice given the recent furore over Homelet advising their members to do exactly that lol
@ Ray Comer
Not for me to answer for EW who can easily stand up for himself but I can assure you that many of the larger and national agents especially now make an independent inventory compulsory.
The reasons are simple:-
1. It is a benefit for the Landlord
2. It is a benefit for the tenant
3. It is an incredibly time consuming process in an agents office. A decent inventory on a three bed house will take in total 3 hours AT LEAST in terms of travel to and from the property, time on site, typing up the inventory, checking it and so on
4. The what happens after all that effort if your in-house effort proves inadequate, incomplete etc and the Landlord loses (he sues you, that's what!!)
5. Above all it is critical in any TDP dispuite. If you don't believe me just read the excellent little DPS leaflet entitled The Essential Guide to Dispute Resolution which virtually smacks you in the face with a wet haddock in referring to the best practice by ARLA, NAEA and above all, RICS.
TDS has been moving in that direction for a while too. My guess is that within about 2-3 years any inventory submitted that is not independently produced will not be accepted no matter how good the in-house quality one is.
Making an inventory compulsory is no more or less of a contractual obligation to entering into the tenancy than making the tenant take contents insurance, which is also easily demonstrated to be a big benefit for the tenant.
The OFT may not like it but it is not illegal as long as you are noyt making the tenant buy a policy you are selling. The inventory I think is different as it is an independent producer who is going to write an independent report no matter who is paying them. Frankly tenants would be much better off with an inventory company as an independent written witness in a dispute, and for certain at Court. As long as they are correct in their claim against the Landlord or defence against his claim of course.
@EW I'd be interested to learn how you make having an inventory, regardless of who provides it, mandatory?
Sure, having a solid inventory in place is a proper precaution for a landlord to take, but forcing a landlord to have one in place from your chosen provider is wrong and I doubt its enforceable.
Ray - fair point.
We use AIIC - but other brands are available!
@EW on 2012-04-10 09:17:45
Yes, agreed - tenants do abuse the fact that it costs nothing to claim/complain - it has been ever thus when to claim something costs nothing. I have been making this point for some time.
AIIC - your choice but they are not the only source ;>).
IO is absolutely correct. Simply by threatening to invoke the process causes many landlords to capitulate, especially as agents know that the odds of winning are slim. It's not a new phenomenon - its the same with TPOS.
That said, some Landlords have themselves to blame in trying to save money on properly qualified Inventory Clerks. It is never a saving in the vent things go wrong - rather like insurance, its an expensive luxury until you need it.
We make having an independent AIIC inventory a mandatory requirement for all managed properties and pass on the cost to the respective party without seeking any 'commission'.
Why does anyone, anywhere continue to be surprised at how many Landlords and agents think the scheme favours tenants?
Of course it does - it was designed to protect them and it is their money so anyone wanting any of it for any reason at any time should have to work hard to achieve that and prove it beyond all reasonable doubt.
The major weakness in TDP remains the tenant's ability to rasie a dispute for £5 at no cost to themselves
In my experience, mainly of the TDS dispute resolution is convoluted and favours the Tenant, even when they have behaved appallingly.
Many "Inventories" I've seen are not worth the paper they are printed on being merely lists of what is in a property. We need to have proper "Schedules of Condition with an Inventory of the Landlord's Furniture(if applicable), Fixtures & Fittings". The schedule needs to record the age and condition of the fixtures, fittings & decoration at the start of the Tenancy, so this can be related to the condition at the end of a Tenancy.