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Tenants' money 'still not safe'

By Bob Howard
BBC Radio 4's Money Box

Liz Phelps, social policy adviser at Citizens Advice
Liz Phelps thinks too few tenants know about deposit protection

Too many landlords are not protecting their tenants' deposits, warn Citizens Advice and the housing charity Shelter.

Since last April, landlords in England and Wales offering new assured shorthold tenancy agreements must join one of three official schemes.

These safeguard deposit money in the event of a dispute, but some landlords are failing to comply.

The government insists the schemes are working well, and have so far protected almost a million deposits worth 900m.


Ben Ferguson from Peterborough paid a deposit of 825 to a letting agent in May 2007.

This money should have been covered under the legislation, but his agent did not sign up with any of the schemes, and subsequently went out of business, leaving Ben out of pocket.

He told Radio 4's Money Box programme the government should do more to raise awareness of the schemes.

"They really need to make tenants aware that these deposits need to be protected.

"A lot of people don't know about these schemes and what the agent's responsibilities are."

The problem is, how do you clamp down on it?
David Young, Reading

The full scale of the problem is not clear, but Shelter says it gets calls every week about deposits still not being protected.

And Citizens Advice says its bureaux around the country regularly report complaints about the same issue.

"It's clearly good news that a million deposits are protected," said Liz Phelps, social policy adviser at Citizens Advice.

"But it's now quite clear that we are seeing far too many tenants who knew nothing about it and whose deposits weren't protected," she added.


If a landlord does not sign up to a scheme, it is up to the tenant to take their landlord or agent to the county court, which has the powers to award a tenant three times their deposit.

Marveen Smith, partner, Pain Smith
Civil action means people have to have the courage to go to the county courts
Marveen Smith, partner, Pain Smith

At least one tenant has already successfully taken her landlord to court.

Marveen Smith is a property solicitor who also acts as a legal adviser to The Tenancy Deposit Scheme, one of the three bodies.

She would like more tenants to use the court system, but admits many may be too daunted to do so:

"Civil action means people have to have the courage to go to the county courts.

"There's no real alternative."

John Socha is vice chair of the National Landlords Association and director of another scheme called mydeposits.

He believes the majority of landlords are signing up, and expects that legal action of this sort will become less necessary:

"You'll have to find a tenant who didn't know about the scheme, and a landlord who didn't know about the scheme, so that will become increasingly less and less."

Whose responsibility?

Others are calling on the government to make changes so it is not solely the tenant's responsibility to enforce the legislation.

Greg Mulholland, Liberal Democrat MP for Leeds North West, campaigns on housing issues:

"The government has to be bold here and look at setting up an agency or resourcing the schemes themselves to have enforcement arms," he said.

The Department for Communities and Local Government (DCLG) is responsible for the deposit schemes.

A spokesman said it believes the schemes are protecting tenants' deposits very effectively:

"Nearly 1 million deposits and 900m have been safeguarded under the scheme in the first year alone."

There were no plans to revise the "tough enforcement powers" already in place, he added, citing the courts' ability to levy "hefty" fines on landlords who failed to comply.

BBC Radio 4's Money Box was broadcast on Saturday,
10 May 2008 at 1204 BST.

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