Hamilton Fraser Insurance is to operate one of the insurance-backed tenancy deposit protection schemes after being appointed by the Department for Communities and Local Government.
The scheme will be known as Tenancy Deposit Solutions and is in conjunction with the National Landlords Association.
The bid, which was accepted after an 18-month selection process, comes after changes to the 2004 Housing Act.
From 7 April 2007, all private rented housing sector landlords operating AST agreements within England and Wales, who take and hold a deposit from their tenants, will be required to protect this deposit in the event that they do not return all or part of it to the tenant at the end of the tenancy agreement.
From this date, Hamilton Fraser said private landlords will have three options open to them:
• Stop taking a deposit from tenants
• Lodge the whole deposit with the default custodial scheme at the start of the tenadeposit scheme for the right to continue to hold the deposit themselves. They will have to pay a fee to the scheme in order to obtain this protection for each deposit held by them.
Both types of scheme will make provision for disputes between landlord and tenant, over the return of any depdispute resolution service, the broker added.
Eddie Hooker, managing Ddrector of Hamilton Fraser, said: “Our research shows that a large majority of landlords will wish to continue to hold on to the deposits that they take from tenants. Many landlords feel that the taking of deposits is one of the few safeguards available to them against damage to their property by unreliable tenants.
“It is our view that the insurance-based option will be more attractive to landlords despite the fact that the custodial scheme will be free. We are delighted with the opportunity to operate one of these schemes”
