Tenancy Deposit Scheme: Extension of contract

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A decision made on 31 October 2018

Decision Reference: MD-H-2018-0022
Decision Summary Title:	Tenancy deposit scheme – extension of contract		Date of Decision Summary:	26th October 2018
Decision Summary Author:	Policy Principal		Decision Summary: Public or Exempt?	Public
Type of Report:	Written		Person Giving Oral Report:	Policy Principal
Written Report Title:	Tenancy deposit scheme – extension of contract		Date of Written Report:	26th October 2018
Written Report Author:	Policy Principal		Written Report: Public or Exempt?	Public
Subject: Tenancy deposit scheme – extension of contract
Decision(s): The Minister for Children and Housing decided to approve the extension to the existing contract between Tenancy Deposit Solutions Limited (t/a mydeposits Jersey) for a period of two years for the provision of a tenancy deposit scheme in Jersey. The Minister confirmed the continuing appointment of Tenancy Deposit Solutions Limited as the scheme administrator for the tenancy accordance with Regulation 3(1) of the Residential Tenancy (Deposit Scheme) (Jersey) Regulations 2015.
Reason(s) for Decision: The Minister has discretion to extend the term of the contract with the scheme administrator for a further period of up two years, subject to good performance. The Minister for Housing has reviewed the performance of the mydeposits Jersey tenancy deposit scheme since it commenced in November 2015 and is satisfied that the term should be extended. The contract commenced on 2nd November 2015 and terminates on 31st October. It is now the Minister’s intention to extend the contract to 30th October 2020.
Resource Implications: There are no resources implications arising from the Ministerial Decision.
Action required: The Minister for Children and Housing to sign the contract extension with Tenancy Deposit Solutions Limited for the provision of a tenancy deposit scheme.
Signature:		Position: Senator Sam Mézec Minister for Children and Housing
Date Signed:		Date of Decision (If different from Date Signed):

Tenancy Deposit Scheme: Extension of contract

Minister for Children and Housing

Tenancy Deposit Scheme – three year contractual review

Introduction

AS OF SEPTEMB

1.1. The contract between the Minister for Housing and Tenancy Deposit Solutions (Jersey) Ltd (t/a mydeposits Jersey) to operate a tenancy deposit scheme was signed on 17th September 2015.

1.2. The contract commenced when the scheme launched on 2nd November 2015. The contract is for three years and will terminate on 31st October 2018.

1.3. Subject to performance, the Minister may extend the contract with the company for a further period up to two years, extending the scheme to the end of October 2020.

1.4. A review of the performance of the scheme has been carried out to help inform the Minister’s decision as to whether to extend the contract.

Background

2.1. A tenancy deposit scheme is a service designed to hold and protect the deposit money that a tenant may hand to their landlord at the start of a tenancy. When deposit money is received by a landlord, it must be protected in the scheme for the duration of the tenancy.

2.2. The deposit money will be released to the tenant at the end of the tenancy, in full or in part, depending on whether the landlord needs to make deductions to cover breaches of the tenancy agreement such as repairs, unpaid bills and rent arrears.

2.3. The purpose of a tenancy deposit scheme is to protect tenants against the risk that a landlord may unfairly withhold their deposit money at the end of a tenancy. It also provides a dispute resolution mechanism to deal with situations where a landlord and a tenant disagree over the return of deposit money.

2.4. The Residential Tenancy (Deposit Scheme) (Jersey) Regulations 2014 provide the legislative framework for the tenancy deposit scheme. The Regulations were adopted by the States Assembly in July 2014 (P.111/2014), and give the Minister for Housing power to appoint a scheme administrator to set up and manage a tenancy deposit scheme.

2.5. Following the Assembly’s decision, the Strategic Housing Unit commenced work to procure a scheme administrator. The Minister for Housing selected Tenancy Deposit Solutions as the preferred provider for a tenancy deposit scheme on 28th May 2015 (MD-C-2015-0060).

2.6. The contract with Tenancy Deposit Solutions was signed on 17th September 2015 and the mydeposits Jersey scheme launched on 2nd November 2015.

Performance of the scheme – key performance indicators

3.1. The performance of the mydeposits Jersey tenancy deposit scheme is monitored in accordance with approved key performance indicators (KPIs) set out in the contract with the company. The KPIs align with the ones set by the UK Government for the equivalent schemes operating in England and Wales. The KPIs relate to various aspects of service delivery:

KPI no.	Areas of performance	Target	Indicator (% of cases)
1	Responses to customer enquiries and complaints	14 working days	100%
2	Response to request for information as to deposit held in Scheme (Reg. 24)	3 working days from receipt	100%
3	Confirmation given to Landlord of protection when deposit paid into Scheme	2 working days from receipt	100%
4	Confirmation given to Tenant(s) upon Landlord paying deposit into Scheme(Reg. 31(3))	2 working days from receipt	100%
5	Return of undisputed deposit (Reg. 14)	5 working days	100%
6	Resolution of dispute by the ADR service	28 working days from referral of dispute	100%
7	Notification of dispute resolution decision	2 working days from decision	100%
8	Return of deposit following notification of dispute resolution or Court decision	5 working days from receipt of decision, unless review requested	100%
9	Accept or reject request for review of adjudicator decision in dispute resolution	5 working days from receipt of request	100%
10	Complete review of adjudicator decision	10 working days from referral	100%
11	All required monthly, annual reports, and requests for information provided to the Minister for Housing	Within specified timeframe	100%

3.2. In the period since the tenancy deposit scheme was set up, the Strategic Housing Unit is satisfied that mydeposits Jersey has met the above KPIs.

3.3. Moreover, mydeposits Jersey has undertaken numerous consumer surveys to establish how well received the scheme is in the island. The results show:-

Scheme awareness is strong – 90% of protected tenants are aware that their landlord or agent has secured their deposit with the scheme.

Good support from the rented sector – 77% of tenants believe that deposit protection will have a positive impact on their renting experience.

38% of tenants previously had a bad experience with the return of their deposit – 90% of these tenants believe that deposit protection will help improve their experience.

Comments from tenants indicate they value a neutral third party holding the deposit, which gives more confidence to both parties.

Take-up of the tenancy deposit scheme

4.1. At the outset of the tenancy deposit scheme, it was estimated that there were 13,000 private tenancies in Jersey based on figures from the 2011 Census. At the end of September 2018, 9,766 deposits have been protected with the scheme at a total value of £8,251,476.

4.2. Whilst accepting that the scheme has been positive overall, the take-up rate as measured by deposits lodged has been less than originally modelled. The reasons for this are due to a range of factors, including:-

Tenancies are longer on average than originally thought and are therefore not required to be protected by the scheme. The result is fewer deposits taken than anticipated.

A reduction in the number of landlords taking deposits as a result of the introduction of the scheme.

Landlords and agents failing to comply with the scheme requirements.

4.3. With regard to the use of the alternative dispute resolution service, as of the end of September 2018, 96 disputes have been referred to the service since the scheme commenced. These cover matters such as cleaning, repairs and redecoration, and rent arrears.

Issues that have arisen

5.1. Since the scheme launched in November 2015, there have been no major issues identified in terms of its operational performance and service delivery. As with any new legal requirement, the change in practice required in relation to the handling of deposit money did cause concern among industry groups.

5.2. When mydeposits Jersey was created, the Minister for Housing stipulated a requirement that there should be a local point of contact for the service, recognising that some customers would prefer face-to-face support rather than using a completely online service. Since 2016, Citizens Advice Jersey has been operating as a local partner for the scheme.

5.3. Citizens Advice Jersey is a natural source of advice and guidance for the scheme and this is demonstrated by the number of customer contacts with landlords and tenants. In 2017, Citizens Advice Jersey dealt with circa 190 enquiries about the scheme. For the purpose of this review, Citizens Advice has confirmed that it is satisfied with the performance of the mydeposits Jersey scheme and the working relationship that has been developed as a result.

5.4. The performance of the mydeposits Jersey tenancy deposit scheme is monitored and reported to the Strategic Housing Unit on a monthly and annual basis against the KPIs outlined above and general feedback. Review meetings are also held to discuss the ongoing financial performance and long-term viability of the scheme.

5.5. In the summer of 2017, the scheme experienced an unexpectedly high level of demand. This led to a short-term service issue and, following discussion with the Strategic Housing Unit and on-island partner, Citizens Advice Jersey, mydeposits Jersey addressed the issue by:-

Employing additional staff members into the customer service team.
Establishing a dedicated mydeposits Jersey ‘hotline’ for use by Citizens Advice.
A dedicated Business Development Executive for Jersey was appointed who visits the island on a regular basis to maintain relationships with scheme stakeholders.

The Strategic Housing Unit was satisfied with the action taken and the improvements to service that resulted.

5.6. Mydeposits Jersey has also been proactive in providing information to the Minister for Housing in response to direct queries from members of the public and in responding to States questions, media enquiries and FOI questions.

5.7. Where there have been delays in returning deposit money, it has normally been the result of an agent, landlord or tenant not having provided accurate banking details in order to allow the scheme to return a deposit promptly. In all other circumstances, where the release of a deposit has been agreed by the parties, deposits will be returned the same day when requested before 1pm, and the next day when requested after 1pm.

Effectiveness of the legislation

6.1. The Residential Tenancy (Deposit Scheme) (Jersey) Regulations 2014 include similar legislative provisions and requirements as equivalent legislation for tenancy deposit schemes in England and Wales, Northern Ireland and Scotland. The statutory framework for the tenancy deposit scheme, therefore, remains appropriate. However, there are a number of small amendments to the scope of the tenancy deposit protection that might improve the effectiveness and take-up of the scheme.

6.2. Firstly, the tenancy deposit scheme currently applies only to tenancies entered into, renewed or varied after 2nd November 2015. The arrangements do not apply to tenancies that commenced before this date so not all tenants benefit from the protection the scheme provides. It may be appropriate to make the tenancy deposit scheme retrospective and apply to tenancies that commenced between May 2013 (when the RTL came into force) and November 2015.

6.3. Concern has also been raised about the protection afforded to people who live in non-self-contained accommodation. This type of tenure is not covered by the Residential Tenancy Law so it is not included under the tenancy deposit scheme. As such, there is a concern that some people who pay deposits do not receive the same protections as others.

6.4. In order to alleviate this problem, further consideration could be given to including non-self-contained accommodation within the scope of the tenancy deposit scheme arrangements so that all deposit money is treated the same. However, it is acknowledged that there are legal obstacles to this happening based on the current scope of the Residential Tenancy Law and the types of rented accommodation to which the Law applies.

Conclusions

7.1. The introduction of a tenancy deposit scheme has had a positive effect on Jersey’s rented sector. It provides a greater incentive for landlords and tenants to adopt good practice in the handling of deposit money, and tempers the behaviour of landlords who might otherwise withhold deposit money without justification.

7.2. It is acknowledged that take-up of the tenancy deposit scheme has been lower than forecast and it is important to ensure that the appropriate support for the scheme is in place, including enforcement mechanisms and any legislative changes that may be required in order to ensure all tenants are afforded similar protection where they pay a deposit.

7.3. With regard to the performance of mydeposits Jersey, the company has demonstrated good performance against the contractual KPIs and, despite some issues in late 2017, the response was robust and the results to date have shown improvements in service. There is regular contact with the business manager and company directors, and Citizens Advice has confirmed its satisfaction with the relationship with mydeposits Jersey.

7.4. Moreover, as it is three years into a potential five year contract and, given the likely time it will take to build the scheme up to the full number of tenancy deposits held in the island, it would be prudent to continue with the same scheme administrator for at least the next two years, after which a full tender process will need to take place.

7.5. There are also only a limited number of companies providing tenancy deposit schemes, and the tenancy deposit scheme require specialist expertise, computer systems, and ADR provision, in order to ensure they operate effectively.

Recommendations

8.1. The Minister for Housing is recommended to approve, in principle, the extension of the contract with Tenancy Deposit Solutions (Jersey) Ltd for a further period of two years, which would extend the mydeposits Jersey tenancy deposit scheme to the end of October 2020.

8.2. The Minister is requested to give further consideration to potential measures to improve the performance of the tenancy deposit scheme as explained in section 6.

Official