Tenancy Deposit Scheme - New Charging System Coming Soon

The Board of the Dispute Service has approved a change in the method of charging subscriptions for The Tenancy Deposit Scheme (TDS) next year. Subscriptions will be determined on a fairer basis to take account of the dramatic rise in disputes being sent for resolution by members of the Scheme. The new system was announced today.

"We are moving to a charge which will be based on the number of live tenancies and with discounts and uplifts to members that will reflect the number of cases referred. We shall base our calculations for subscription increases on this method," announced Chairman of the Board John Hornsey.

The Board noted that, under the new system and despite the likely severity of the subscription increases, letting agents registered with The Tenancy Deposit Scheme will be able to control their costs of deposit protection and still be able to off-set the cost. Scheme rules and the legislation allow agents to pass on the cost to their landlord clients.

"This major change in the method of charging also means that agents should start checking their own tenancy schedules sooner rather than later to ensure that all tenancies that have ended are also closed on the TDS database. Under this new system it will be the agent's responsibility to ensure that they are only charged fees on live tenancies," John Hornsey added.

Authorising the principle of a significant rise in subscriptions, the Board pointed out that The Dispute Service is a not-for-profit organisation and that the very substantial rise in the number of disputes will reach a level that is well above the resources available to the scheme if subscription income does not rise in proportion.

In many cases, the Board believes, disputes could, and should, be resolved directly by members, out of petty cash if necessary. For instance, it was felt that it could not have been worth the postage, let alone the letting agent's time, to refer a dispute of £4.20. Yet, this has happened.

Said Chief Executive Lawrence Greenberg, "The £4.20 dispute is the lowest so far but we have had many for not much more. This kind of misuse of the adjudication process is the overwhelming reason why the cost of dispute resolution has increased by nearly 100%. This, more than any other cost increase we have experienced, accounts for the level of subscriptions we will have to consider for next year."

However, Lawrence Greenberg pointed out that given the divergence in the way disputes are put forward by different firms, "It is likely that the new rates will be much fairer as they will be set at different levels based on the past history of a firm's demands on Alternative Dispute Resolution."

25th November 2009

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