TDS, the tenancy deposit scheme aimed at letting agents, has now announced that it will only accept agents and landlords who are members of recognised professional bodies as members from now on. With effect from 6 April 2009 they will be withdrawing membership from current non regulated members.
This action, it appears, has been taken at the insistence of TDS insurers. Another manifestation of the credit crunch perhaps?
The official press release states that they will be writing, not only to all their unregulated agents but also to the tenants of unregulated agents.
Indeed I have learned of one case where TDS have already written to an agent and his tenants (on 2 Jan, before the press release). The agent (who is very reputable) is not surprisingly very upset about the effect this is having on his tenants, particularly as he was given no warning that TDS were going to do this, and therefore had no opportunity to contact his tenants first to explain what action he will be taking regarding their deposits. I understand that a formal complaint will be going in very shortly to TDS about this. Surely it is not beyond the wit of TDS to leave a week or so between writing to the agents/landlords and their tenants?
The press release suggests that agents should be a member of either the Association of Residential Letting Agents (ARLA), The National Approved Lettings Scheme (NALS), the National Association of Estate Agents (NAEA), or the Royal Institution of Chartered Surveyors (RICS). They do not mention other relevant professional organisations such as the Law Society and the Guild of Letting and Management. Presumably members of these organisations are not going to be ‘evicted’ from the scheme also?
My correspondent (the solicitor of the aggrieved agent) points out that TDS action appears to be excessive, as they should have weeded out any ‘bad apple’ agents at the time of application. He also queries whether this action is within the government guidelines for TDS schemes to be available to all.
It certainly seems to be an unfortunate glitch, and will undoubtedly cause a lot of upset among blameless (albeit unregulated) agents, who it should be pointed out, are already paying a considerably higher membership fee to TDS, than for example ARLA agents are.
Two other questions to ask are:
1. Have TDS considered finding alternate insurers (admittedly probably difficult in the current economic climate), and
2. Are there any grounds for the unregulated agents, about to be evicted from the scheme, to sue?
I would be interested to hear from any affected parties as to the effect this will have on them and what action, if any, they are taking against TDS.