Advertisements appeared in the European Journal, inviting organisations to bid to run the proposed new tenancy deposit schemes from October 2006. The schemes will offer protection for more than £740 million of assured shorthold tenancy deposits, currently held in England and Wales.
There are two advertisements, one relating to a single custodial scheme, with the second seeking expressions of interest for one or more insurance-based schemes.
For the custodial scheme, landlords-agents will be required to pay the deposit to a designated third party. A custodial scheme will be required to provide an alternative dispute resolution (ADR) service for dealing with disputes between tenants and landlord-agents arising in connection with deposits.
With the insurance-based scheme, landlords-agents will be required to retain the deposit and pay a premium to a designated third party for them to assure the return of the deposit to the tenant. As with the custodial scheme, the insurance-based scheme will be required to provide an ADR service.