Activation of the delayed requirement for rental deposit protection moved a stage nearer this week with announcement of the names of the firms authorised by the Government to run deposit schemes.

From next April landlords will either have to hand over rental deposits to a ‘custodial’ scheme, or participate in an ‘insured’ scheme. In both instances they will be obliged to agree to abide by the results of arbitration by way of an Alternative Dispute Resolution procedure should there be any disagreement with tenants over deposit repayment.

Initially there will be three authorised schemes. The single custodial scheme called for by the 2004 Housing Act will be run by Computershare Investor Services plc, with the Chartered Institute of Arbitrators providing the a dispute resolution service.

There will be two insured schemes. One will be run by The Dispute Service Limited whose scheme will be directed primarily at letting agents; the other by Tenancy Deposit Solutions Limited. The latter will be sponsored by the National Landlords Association and administered by Hamilton Fraser Insurance, and will be directed primarily at landlords. Again, the Chartered Institute of Arbitrators will be the principal provider of ADR services.

Housing Minister Baroness Andrews claimed introduction of tenancy deposit schemes will help raise standards in the private rented sector and provide a simpler method of resolving deposit disputes.

‘Taking a deposit against unreasonable damage to a property is one of the few safeguards open to landlords. We have a scheme that enables landlords to hold tenancy deposits in a manner that is fair and equitable to both landlord and tenant. We hope that all those involved in the market will welcome this development as a positive contribution to the well-being of the private rented sector’, said NLA chairman David Salusbury.

Further details of the schemes, participation in which will be required in respect of all assured short hold tenancies as from 6 April next, are promised for January 2007. The requirement does not apply in Scotland or Northern Ireland.

In the insurance based schemes, thought likely to be favoured by most landlords, the landlord or agent will hold the deposit and any failure to repay it to the tenant will be covered by the scheme's insurance arrangements. The schemes will be funded by fees paid by landlords or agents, the level is yet to be set, but there will be no additional costs to either tenant or landlord for use of the arbitration service.

• A new law announced in the Queen’s Speech requiring all estate agents to join a redress scheme with power to compensate consumers must not be allowed to over complicate estate agent regulation, according to the Ombudsman for Estate Agents Stephen Carr-Smith.

Must of what is planned for the Estate Agents and Redress Bill already exists, mainly in the form of the ombudsman scheme to which 68 per cent of estate agents in England and Wales already belong, said Carr-Smith.

‘Consumers who don’t want to wait for this legislation will find they already have protection if they use an OEA member firm’.

Under the proposed legislation, agents who refuse to join a scheme will be banned from operating, does not go as far as some form of compulsory training standards and licensing for estate agents ‘which, ideally, I would prefer to see’, said the Ombudsman.

‘However, what is really important is that there should be only one Code of Practice across the whole estate agency industry so that consumers will know exactly what standards they can expect – and the OEA is actively trying to encourage that. Equally, there should only be a single Ombudsman Scheme if there is to be a consistency in how agents are going to be measured against that single Code of Practice. There must be no possibility of agents seeking the lowest common denominator’.