Tenancy Deposit Schemes – Do you know the difference?

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  • Tenancy Deposit Schemes – Do you know the difference?

In the UK, there are two main types of deposit protection services. Custodial schemes and insurance-based schemes but what is the difference between the two?

  1. Custodial Deposit Protection Scheme:

    • How it works:

With a custodial scheme, the landlord or letting agent collects the deposit from the tenant and then this is put into a secure government-approved scheme within a specific timeframe.

    • Security:

A deposit protection scheme holds your deposit throughout your tenancy. Therefore, providing security for tenants.

    • Dispute resolution:

If there’s a disagreement about the deposit at the end of your tenancy, the scheme will hold onto the money until an adjudicator resolves the dispute and the adjudication process is finished.

    • Return of deposit:

At the end of the tenancy, if there are no disputes, the provider returns the deposit directly to the tenant.

    • Examples:

Government-approved custodial schemes in the UK include the Deposit Protection Service (DPS), MyDeposits Custodial, and the Tenancy Deposit Scheme (TDS) Custodial.

  1. Insurance-based Protection:

    • How it works:

With an insurance-based scheme, the landlord or letting agent retains the deposit but must protect it with a government-approved insurance scheme.

    • Security:

The landlord or letting agent holds the deposit for the duration of the tenancy. The scheme provides an insurance policy in which it is protected.

    • Dispute resolution:

In the event of a dispute over the deposit at the end of the tenancy, the insurance scheme may offer an alternative dispute resolution service to help resolve the issue.

    • Return of deposit:

At the end of the tenancy, the landlord or letting agent returns the deposit to the tenant directly, subject to any agreed deductions.

    • Examples:

Government-approved insurance in the UK include MyDeposits Insurance, the Tenancy Deposit Scheme (TDS) Insured, and the Deposit Protection Service (DPS) Insured.

Both types of protection offer security for tenants’ deposits and provide mechanisms for resolving disputes between landlords and tenants. Landlords can choose the type of scheme that best suits their preferences and requirements.

If you’d like to speak to someone about your rental property give our Lettings Manager Beth Roberts a call on 01273 724000 or contact us here

What are the pros and cons of the different registration schemes:

Custodial Protection:

Pros:

  1. Security for Tenants:

Provides tenants with assurance that their deposit is held securely by a third-party scheme. Reducing the risk of loss or misuse.

  1. Less Administrative Burden:

Landlords don’t have to manage the deposit themselves, reducing administrative tasks and ensuring compliance with deposit protection regulations.

  1. Impartiality:

Disputes over deposit deductions are resolved impartially by the scheme. Minimizing the potential for bias.

  1. Clear Return Process:

At the end of the tenancy, the scheme returns the deposit directly to the tenant, simplifying the return process.

Cons:

  1. Delayed Return:

Landlords need to request the return of the deposit from the scheme at the end of the tenancy, which may result in delays compared to insurance-based schemes where landlords hold the deposit themselves.

  1. Limited Control:

Landlords have limited control over the deposit during the tenancy since it’s held by the scheme, which may be perceived as a disadvantage for some landlords.

If you’d like to meet the team responsible for our Deposit Registration Compliance click here

Insurance-based Protection:

Pros:

  1. Immediate Control:

Landlords retain control over the deposit throughout the tenancy, allowing them to manage and use the funds if necessary for repairs or unpaid rent.

  1. Flexibility:

Offers flexibility in terms of deposit protection, allowing landlords to choose the insurance scheme that best suits their needs.

  1. Faster Returns:

At the end of the tenancy, landlords can return the deposit directly to the tenant without having to request it from a third-party scheme, potentially resulting in faster deposit returns.

Cons:

  1. Administration Required:

Landlords need to ensure that the deposit is protected and registered with an approved scheme. This involves additional administrative tasks and potential penalties for non-compliance.

  1. Risk of Disputes:

Since landlords hold the deposit themselves, there may be a perception of bias in deposit dispute resolution. Tenants may feel disadvantaged compared to custodial schemes.

Ultimately, after weighing all the factors, the choice between custodial and insurance-based protection depends on landlords’ preferences, administrative capabilities, and risk tolerance. That said, both types of schemes offer advantages and disadvantages. For instance, custodial schemes are attractive for their ease of use and lack of upfront costs. On the other hand, insurance-based schemes may offer faster payouts in case of disputes. Therefore, landlords should carefully consider their options before selecting the most suitable deposit protection scheme for their rental properties.

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google-review Review
Roisin Lilley
Roisin Lilley
11:42 24 May 24
I recently had some problems with my previous agent and came to Beth for help! She took over the correspondence for me and sorted everything out for me! I can’t thank her enough for her patience and help!! I’d highly recommend her to other landlords that need help!
Chris Lilley
Chris Lilley
11:26 24 May 24
I’ve been a tenant with Harringtons Lettings for a while, they are great, they always sort out any issues I have quickly and efficiently, Beth in particular is really helpful and I’ll be going to her for my next rental property when I look to move in September!
Georgina Palzeaird
Georgina Palzeaird
11:21 24 May 24
Beth Roberts was a huge help when I needed to switch to a new letting agency. She was friendly and efficient and I’ve always felt I’m in safe hands.
Eliya Halim
Eliya Halim
10:26 24 May 24
Top service
Maryana Atiya
Maryana Atiya
10:20 24 May 24
Rees Harper
Rees Harper
17:53 21 May 24
Lauryn Keller
Lauryn Keller
15:20 03 May 24
Georgie was great on our viewing - super lovely, informative and honest. Thank you!
Sammi Richmond
Sammi Richmond
09:16 24 Apr 24
Well, they just contacted me via email asking for a review for money... so here, I guess.Does 3 stars get me that tenner? Probably not. Nothing terrible to say, but never had any issues with the property really. Don't enjoy that they were willing to pay for reviews though, seems sketchy.UPDATE: As the business has finally replied to my review 6 years later, I thought I would mention that I indeed have the email still as proof. Offer of £10 for a review, and to mention Rachel Erridge in the review. Also a prize of £200 to one lucky winner. The email was sent from the Harrington's admin email address. I can email the proof to whoever requests it.
Jayden Charles-Frempong
Jayden Charles-Frempong
01:20 18 Apr 24
Every interaction I've had so far with Harrington has been positive with workers responding to calls very quickly and addressing any queries efficiently.
severin severinov
severin severinov
10:05 11 Apr 24
It is very good that they do their job professionally and take care of the customers.
kate quick
kate quick
13:15 09 Apr 24
I am very happy and extremely grateful to have found Harringtons lettings and the beautiful flat that I am now living in. Not only is the flat perfect for me, ticks all the boxes and is in a great location; the whole communication/admin process was so fast and efficient. I spoke to many of the team, but the two main contacts initially were Georgie and Beth. Great personalities, friendly and fast at replying to emails and phone calls. It was all turned around very quickly and everyone at Harringtons seems to appear to really be happy in their jobs. Great letting agent and I would recommend them to others looking for a new home.
Michael Hollamby
Michael Hollamby
12:32 09 Apr 24
Having worked with many many lettings it has been refreshing to deal with such a dynamic and energetic team. From start to finish the team have outstanding. Special mention to Beth who has been fantastic. I can thoroughly recommend using Harringtons.
Celyn James
Celyn James
17:08 27 Mar 24
Great experience, Georgie was so knowledgeable and kind with any enquiries I had. Really put me at ease while house hunting, amazing service thank you so much!!
Madison Harris
Madison Harris
14:29 27 Mar 24
Georgie was so helpful and really kind very appreciative x
Amber-Rose Cook
Amber-Rose Cook
08:58 22 Mar 24
easy to use and navigate as a first time user
Buffy Vaughn
Buffy Vaughn
18:06 21 Mar 24
Harringtons have been so helpful so far. Everyone we’ve spoken to on the phone including Georgie have been so warm and receptive and easy to communicate with. As a couple renting together for first time me & Danny couldn’t have found better people to help us out, they’re clear and concise. We discovered them through Rightmove and would highly recommend anyone to use their services to rent with.Thanks guys!Buffy & Danny
Sajan Raja
Sajan Raja
01:48 21 Mar 24
Kerryn Johnson
Kerryn Johnson
16:58 18 Mar 24
Georgie was absolutely amazing! Very helpful, easy to talk to and all in all an absolute sweetheart. Made the process of renting and finding a property less stressful. Always happy to help and lovely to chat to!Thank you again for everything!
Julia Reinstein
Julia Reinstein
11:22 18 Mar 24
5/5 - Everyone I’ve spoken to on the phone has been so friendly and patient with our move in documents. We found Harringtons through Rightmove, and have been really happy with our interactions. The team respond to queries efficiently and are happy to answer any and all questions.
Andrew Brown
Andrew Brown
07:09 15 Mar 24
A really excellent agency, who are very easy and friendly to deal with. Highly recommended.
Rob Rainbird
Rob Rainbird
18:04 13 Mar 24
Lovely staff and all round positive experience - Georgie is an absolute diamond and a credit to the team!
Tori Tor
Tori Tor
11:15 08 Mar 24
Harringtons have been really helpful and very swift with their responses. Georgie was very proffesional and really friendly when she did the viewings with me and Beth on the phone was again really helpful and gave me hope when I was explaining my eagerness to find somewhere new to live. Thanks Harringtons!
christos papanicolaou
christos papanicolaou
09:33 07 Mar 24
Staff were brilliant. Very helpful
Yasmin Bright
Yasmin Bright
20:54 01 Mar 24
I'm in a difficult situation at the moment with my landlord wanting to sell the flat that myself and my 3 children have been living in for 7 years. I came across Harringtons Viewings by applying to view some properties outside of my area.Unfortunately I haven't been able to sort anything with Harringtons, however I wanted to write this to say that they have been nothing but kind, warm and very understanding of my situation. I've been really impressed by their customer service (namely Georgie & Beth) and hope that they are able to find me something eventually!Thanks so much.Yasmin
Tegan
Tegan
17:30 22 Feb 24
Have been very accommodating and helpful when calling agents. They have been very helpful in being able to secure a house for students.
TheFlyingCrocodile
TheFlyingCrocodile
16:42 21 Feb 24
Went above and beyond to get things sorted for me
Brittany Stace
Brittany Stace
11:18 24 Jan 24
Harringtons have been incredibly helpful and supportive of us as new renters and they have been super efficient in getting all of the documents sent through and signed in such a short period of time. Thank you!
Georgie Prebble
Georgie Prebble
20:36 05 Jan 24
Jade Innes
Jade Innes
10:24 04 Jan 24
So far the service has been good. The staff are very friendly and quick to respond to any questions and requests.
Polly Smith
Polly Smith
11:17 28 Dec 23
we chose this letting agents as they chose a good bills company that is much cheaper than other agents. When viewing houses the staff were very friendly and have been very helpful in answering our questions and making the process as easy as possible.
Emma Howe
Emma Howe
16:06 14 Nov 23
I would rate Harringtons Lettings a 5/5. Very lovely on the phone and very quick and easy to communicate with via email. Any problems have been resolved in no time at all. So far so good!I found Harringtons via Rightmove.
Akwisitions Feedback
Akwisitions Feedback
16:25 30 Oct 23
Very responsive and super helpful throughout the process. Highly recommended!
Chloe Ballard
Chloe Ballard
17:28 02 Oct 23
Although I have only been renting with Harringtons for a short period of time, I have had nothing but a positive experience. From viewing to admin updates. The admin team especially are very polite and quick to respond and I have no doubt that the rest of my tenancy will run smoothly. I would recommend to anyone considering renting in brighton.
Matthew Ball
Matthew Ball
11:46 19 Sep 23
Professional communication with tenant although entirely impersonal. There was a bigger disconnect in their communication with the landlord in most cases, which seemed to be either slow or non-existent (discovered after contacting the landlord directly).Property was full of spider webs on day 1 despite apparently being professionally cleaned. Took a day off of work to clean it on move out day, leaving it cleaner than when it received but still had to pay part of the deposit for professional cleaning.It has been a while since I have rented, but I'll avoid letting agencies completely now if this is anything close to the average renting experience.
Ronan SK
Ronan SK
12:38 12 Sep 23
Great professionalism/communciation from the start up until the end of my tenancy. Definitely set the standards for what agencies should be like. Highly recommend to those within Brighton.
Daniel Sutton
Daniel Sutton
10:29 24 Aug 23
I have rented with Harringtons Lettings before and have always found the agents to be quick, efficient, friendly and helpful. I loved their service so much I have chosen to rent with Harringtons again. Faultless 😊
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