Over 45 per cent of respondents felt it is a worthwhile piece of legislation, while a slightly larger 55 per cent described it as a ‘hammer to crack a walnut’.
A key part of the Housing Act 2004 and originally planned for implementation on 1 October this year, the government recently announced that the TDS will be delayed pending further consultation. A new launch date is to be announced before the Summer Recess.
The measure is designed to protect tenants who have difficulty recovering their deposits and to help resolve disputes between landlords and tenants.
The TDS is expected to take the form of a custodial scheme (whereby the deposit is held by the scheme during the tenancy and any subsequent dispute) or an insurance-backed scheme (where it is held by the landlord or his agent but protected by insurance).
The biggest concern among intermediaries remains the lack of information on the subject. A massive 86 per cent believe that there is not enough information to enable landlords to prepare for its introduction.
Nicola Severn, marketing manager at Mortgage Trust, commented: “There is a wide divergence of opinion as to whether or not the proposed tenancy deposit scheme is a good idea or not. Many people in the industry think that this regulation is a step too far, on top of the recently introduced licensing of houses in multiple occupation. However, a large minority of intermediaries welcome it. What comes over strongly, however, is that intermediaries lack adequate information on the TDS, and that it needs to be better communicated.”
Notwithstanding these concerns, intermediaries are sanguine about the impact the TDS will have on the market.
87 per cent of intermediaries believe it will have little impact on the buy-to-let market and only 6 per cent expect existing investors to sell. A similar proportion indicated that it could deter investors from entering the market.
Nicola Severn committed: “The vast majority of intermediaries are not worried that TDS will impact adversely on the private rented sector, with only a small minority believing it could spur landlords to reduce their involvement or deter new investors from buying. However, the devil is in the detail which so far has not been communicated. The delay in implementation will at least enable the government to consult further and ensure that this measure is introduced in such a way that it has minimal negative impact on the market.”
Indeed, intermediaries remain confident as regards business volumes. 47 per cent expect to write more buy-to-let cases in the coming three months, and 34 per cent expect volumes to stay consistent.
Intermediaries are also positive on house prices, 79 per cent of them expecting house prices to increase over the next three months. On the other hand, there is also a growing expectation that interest rates are on the rise. 26 per cent of intermediaries expect a base rate increase in the next three months compared to only 2 per cent in Mortgage Trust’s last survey.
