This week Capita announced the launch of a new deposit protection scheme.
Capita Tenancy Deposit Protection, which has been authorised by the government, presents landlords with a new option when considering how best to protect their tenants' deposits. But how does it differ from the other schemes already on offer?
How does the scheme work?
Capita Tenancy Deposit Protection is an insurance-based scheme. This means that the landlord holds onto the deposit, while Capita provide insured protection for the sum over the course of the tenancy. This is in contrast with custodial schemes, in which the deposit is handed over to the protection service.
The amount you pay Capita depends on the size of the deposit. Deposits up to £499.99 are charged at £15 per tenancy, while those over £500 attract a fee of £22.50. Letting agents regulated by a trade body pay £9.50, while unregulated agents pay £30 per tenancy. These prices are roughly in line with the other three deposit protection schemes available: the Tenancy Deposit Protection Service, Tenancy Deposit Solutions, and the Deposit Protection Service.
The operation of the scheme is similar to that of other insurance-based protection services. Landlords must provide standard information about themselves in order to join the scheme, and must then give details of the tenants and tenancy, along with the fee, in order for the deposit to be protected. When the tenancy nears its end, Capita will email asking you whether the tenancy is being renewed. If they don't receive a reply, they will assume that it is being renewed with the same details, and will raise an invoice for the amount due. Otherwise, you will be expected to agree with your tenant how much of the deposit is to be returned, and to return it to them within 10 days.
What are its benefits?
While Capita's solution isn't any more cost effective than its competitors, its major advantages can be seen in the way in which it handles disputes. In the event that there is a disagreement between you and your tenant about the amount of the deposit to be returned, Capita offers dispute resolution through Ombudsman Services, an established dispute resolution firm.
Capita also suggests that it may be reassuring for landlords and tenants to know that their deposit is being backed by a FTSE 100 company.
What are my legal obligations?
Whether or not you choose to do with Capita, you are legally obliged to protect your tenants' deposits within 30 days of receiving them. Failure to do so could result in you having to pay fines. Read more about resolving disputes here.