Nationwide Halts New Lending to Landlords with Tenants on Housing Benefits

The Mortgage Works, Nationwide’s buy-to-let lending subsidiary, has stopped new lending to landlords who have tenants receiving housing benefits, a move experts warn could leave many people struggling to find a place to live.

TMW, which has a BTL market share of around 20 per cent, previously lent on a case-by-case basis to landlords with tenants receiving housing benefits. It was the biggest lender offering such mortgages.

A TMW spokeswoman says: “Previously, lending to landlords with local authority tenants was not explicitly referenced in TMW’s lending criteria. Our re-issued terms and conditions make it explicit that local authority tenants are not acceptable.”

Remortgaging decisions for landlords with tenants on housing benefit using TMW should be unaffected as they will be based on rental cover rather than the nature of the tenancies, according to the spokeswoman.

There are around 3.8 million households in private rented accommodation, 26 per cent of which - 982,000 households - receive housing benefits, according to Government figures.

National Landlords Association head of policy Chris Norris says: “There is a huge market for tenants in receipt of local housing allowance and if the private-rented sector does not help to support housing provision, many tenants may be left homeless.”

LettingFocus.com private rented sector consultant David Lawrenson believes the move is a reaction to the Government’s new benefits system, Universal Credits, which comes into effect in April.

It will cap benefits at £500 a week for couples and £350 for a single person, including housing benefit, and will mean fewer benefits are paid directly to the landlord.

At present, 39 per cent of housing benefit payments are made direct to landlords, according to the NLA, but the new system will only permit payment direct to landlords in specific circumstances, such as a pattern of arrears.

Lawrenson says: “Under the Universal Credits system, not only will payments be capped but there is also less chance of landlords being paid direct, making it less attractive to lend on this basis.”

Lenders still offering mortgages to landlords with tenants receiving housing benefits include Keystone, Leeds Building Society, and Paragon and Mortgage Trust.

The Buy to Let Business managing director Ying Tan says: “It is disappointing because it is an area where there are few lenders willing to lend.”

Click here to read the original article "Nationwide Halts New Lending to Landlords with Tenants on Housing Benefits"

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HMRC Attack on Landlords Ignores the Tax Inquiry Rules

This article has been provided by George Bull, Senior Tax Partner at Accountants Baker Tilly:

Armed with information provided by a local council, HMRC is now targeting domestic landlords in an attempt to track down those evading tax by failing to declare rental income.

Letters issued by the department are looking for information on addresses of properties, periods let, and the amounts of monthly or weekly rent involved, as well as asking a string of further questions such as how each property was acquired (e.g. purchased, inherited, or gifted) and even the number of tenants in each property.

Clearly it’s good to see HMRC cracking down on tax cheats, but we do have real concerns over what appears to be the non-risk-based approach of this campaign. What’s even more shocking is that telephone staff at HMRC are openly admitting that the probing letters are being issued without the department having first checked whether the landlord is in fact fully declaring the rents on their annual tax returns.

Quite aside from the fact that questions asked of taxpayers who have completed returns under Self-Assessment must be made under the formal and time-sensitive enquiry framework, it seems that HMRC staff are unnecessarily wasting the time of law-abiding taxpayers, as well as their own valuable people resource.

Surely it’s time HMRC were more careful with their precious resources and invested time in carefully checking third-party information before sending what might be viewed as scarily aggressive letters to those who are fully tax compliant?

Click here to seethe article: “HMRC attack on landlords ignores the tax inquiry rules”

Council Increases HMO Fees by over 50%

A group which represents Nottingham landlords has said a rise of more than 50% in licence fees is unjustified.

The city council is increasing the cost of Houses in Multiple Occupation (HMO) licences from £640 to £980 a year.

East Midlands Property Owners (EMPO) claimed the move was unfair at a time of economic hardship.

But the authority said there had not been a rise in five years and the money would go towards keeping rented property standards up.

'Policing' cost

A house needs a HMO licence if three or more storeys are rented to five or more people in two or more households, but which are not buildings converted solely into self-contained flats.

Giles Inman, from EMPO, said: "Our landlord membership are not very happy with this as it represents over a 50% increase in licensing fees.

"We can't really see any justification for such a huge increase, especially when you consider how the economy is right now."

But city councillor Dave Liversidge insisted the rise could be justified and said: "It might seem a big rise but it is the first time we have done it for about five years.

"The reality is that this money is used to make sure the private rented sector is a sector that people want to live in, so we need to police it to make sure we get good quality private sector properties."

The increase comes into force from 25 March.

Click here to read the original article

Should Building Societies Lend to Buy-To-Let Landlords?

Building societies began to provide homes for members; now they help landlords to snap up properties traditionally bought by first-time buyers.

This month, a reader in Yorkshire submitted the following question to The Guardian's Personal Effects column:

"I wish to avoid my investments being used to support the buy-to-let racket. Is there a building society that only loans for owner occupation rather than funding landlords' investments? I have helped one daughter avoid renting and will do the same for her sister, but would like to ensure I am not assisting buy-to-let in general."

Building societies date back to the "Midlands Enlightenment" when, in 1775, some citizens of Birmingham, then a fast-growing metalworking town, met at the Golden Cross Inn and agreed to pool their money to build houses for members.

The explosion in house building in the 1920s and 1930s was largely financed by the building societies (Abbey in particular) and until the 1990s they were at the heart of the extraordinary rise in home ownership.

But are they now, as our reader from Yorkshire worries, turning their back on buyers in favour of landlords?

Rather than put the question to readers, I decided to ask the Building Societies Association. It told me that virtually all its members offer buy-to-let mortgages. "Building societies were originally established to house local communities, and the sector still has a keen interest in supporting communities which offer a choice of different forms of housing – for some people, renting is a choice rather than a necessity," said a spokeswoman.

Funny thing, that word "choice". When a spokesperson in favour of buy-to-let says it's about "choice", I ask them if they rent or own their home. I've never yet met one who doesn't own. "Choice", it seems, is for other people, not them. The reality is that only a few people choose to rent over the long term. The rest are more accurately described as "trapped".

Building societies are mutual organisations, controlled by their members. So it surprises me that there have been no resolutions at society annual meetings asking for a society to stop favouring landlords. The BSA told me: "We are not aware of any critical resolutions on this topic."

It's not difficult to understand why building societies are so keen to offer buy-to-let: loans to landlords usually earn the society a higher fee than loans to first-time buyers and are regarded as lower risk.

The BSA says one in three of its members' loans last year were to first-time buyers, and that one type of lending (buy-to-let) is not at the expense of the other (first-time buyer). But can we be sure of that? Landlords typically buy the sort of property – be it one- and two-bed flats in London or terraced houses in other towns and cities – that used to be the first rung in the ladder for would-be owner-occupiers.

Because Britain builds so catastrophically few houses, this is arguably a zero-sum game. When a loan is granted to a landlord, it effectively means yet another property is removed from owner occupation. It doesn't help that buy-to-let remains unregulated, with loans calculated on a cheap interest-only basis (with tax benefits thrown in), while today's first-time buyers have the full force of post-financial crisis regulation dumped on them.

Neither does it help that our pension system remains so incapable of providing security for savers. It's entirely understandable, financially speaking, that someone should want to invest in a property for their pension rather than cash ISAs – now paying a pathetic 1.7% average interest. But the rational self-interest of investors is sentencing young families to a life of precarious renting.

Perhaps buy-to-let should be restricted to new-build properties only. Money pouring into new build could help to stem price rises while boosting the construction industry. Is this the way to turn buy-to-let investors into heroes rather than villains?

Click here to read the original article: "Should building societies lend to buy-to-let landlords?"

Ministers Disagree about Paying Housing Benefit Direct to Tenants

A ministerial wrangle has erupted over plans to pay housing benefits direct to claimants rather than to their landlords.

The Evening Standard has learned that Treasury Chief Secretary Danny Alexander has taken up concerns that it will draw vulnerable people into debt and eviction.

He has written to Welfare Secretary Iain Duncan Smith warning that a big increase in rent arrears would disrupt investment in new social housing.

Mr Alexander is threatening to block the scheme unless safeguards are brought in for the vulnerable.

The plan is part of Mr Duncan Smith’s flagship universal credit reform. He believes making claimants learn to juggle their personal finances to pay for rent, food and heating is essential to preparing them to cope in the world of work.

However, early results from six pilot schemes, including one in Southwark, found the level of rent arrears went up from five per cent to eight per cent — a 60 per cent rise.

A National Housing Federation spokesman said nine out of 10 social tenants chose to have rent paid to their landlords.

He added: “The Government is planning to remove that choice. More than a third of housing associations believe the shift to direct payments to tenants under Universal Credit will make it harder for them to build new homes.”

In his letter, Liberal Democrat Mr Alexander makes clear that he backs Mr Duncan Smith’s general aims but wants safeguards to identify vulnerable people quickly and have their rent paid direct.

A source said: “There are clearly some people who simply cannot manage their own finances and will end up in arrears.

“That is also a problem for housing associations who need to demonstrate a reliable source of rental income to their lenders.”

Mr Duncan Smith is determined to make welfare claimants more self-reliant. One minister said: “It’s a major barrier to people holding down a job if they do not learn how to budget out of their pay packet. In too many cases people can’t cope and get into debt.”

Click here to read the original article: Alexander clashes with IDS over paying housing benefit direct to claimants

Landlord's Fury at 'Drugs Filth' Left by Bad Tenants

A Landlord is facing a bill of thousands of pounds after bad tenants left his property in a "disgusting" state and failed to pay £1,200 in rent.

Anthony Thomas has owned the house, in Buller Street, Grimsby, for the past eight years and has never experienced a problem before.

This was until the 76-year-old rented out the property in July 2011 – and he has contacted the Telegraph in disgust at how it has been left.

He evicted the man and woman after they owed him £1,200 in rent, and he claims they left behind used needles and a bottle of methadone

A few days later, there was a break-in at the property.

"The house was perfect when they moved in," said Mr Thomas, of Healing.

"Following the break-in, the police came round and had to hold their noses because the smell was so bad.”

"There are bags of human excrement thrown all over the place and stuck in the drains.”

"There is drug paraphernalia all over the house that needs disposing of.”

"It would cost thousands of pounds to get the house back to a habitable state; I can't afford it and I fear I don't have a choice but to leave it in the state it is.”

"I have taken up the stair carpet because it was covered in dog muck, but I just don't have the heart to do anymore.”

"It is disgusting. I have considered selling the house, but no one will buy it like it is."

Mr Thomas has come forward to warn what can happen if a property is rented to troublesome tenants.

There are precautions landlords can take, said Chris Norris, of the National Landlords Association (NLA).

"When taking on a new tenant the landlord is taking on a risk, so it is important to be satisfied that appropriate tenant checks have been carried out before granting a tenancy," he explained.

Finding the right tenant is not an exact science, but a variety of tools are available, such as referencing, identity checks and credit checks, to help the landlord make an informed decision about prospective tenants.

The NLA advises all landlords to take a deposit and to create an inventory in case the tenant causes damage. Once a tenancy has come to an end and the landlord has gained vacant possession, they should carefully inspect the property for damage.

If an inventory was created at the beginning of the tenancy, it is relatively easy for a landlord to justify making deductions from the tenant's deposit to rectify any damage or replace missing items.

A detailed inventory, with photos if possible and signed by both landlord and tenant is key.

If there is considerable damage to the property, the landlord can use the Small Claims Court or Money Claim Online Service to obtain a money order in respect to damage caused by the tenant.

To read the original article click here: "Landlord's Fury at 'Drugs Filth' Left by Bad Tenants"

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Buy-to-Let Lending Bounces back as Landlords Cash In on Rising Rents

The number of buy-to-let mortgage loans reached its highest level for four years last year, the latest figures show, as record rents encouraged landlords to expand their property portfolios.

Gross buy-to-let lending reached £16.4bn over the year, up 19% on the £13.8bn advanced in 2011, the Council of Mortgage Lenders (CML) said.

The total number of buy-to-let mortgages outstanding at the end of 2012 jumped to 1.4m, or 13% of all mortgages, up from 12% in 2009 and 9.6% in 2006.

In total, 136,900 of the loans were advanced during 2012, the highest number since 2008 – though still far from the high of 346,000 seen in 2007.

The CML said the buy-to-let market was benefiting from strong tenant demand, "which is likely to continue". Its director general, Paul Smee, added: "The overall outlook for the buy-to-let sector is positive. Landlords who can demonstrate a strong track record are in a good position to expand their portfolios."

Jonathan Harris, director of mortgage broker Anderson Harris, said the figures reflected greater numbers of would-be first-time buyers turning to renting while they struggle to get a foothold on the housing ladder. "This is pushing up rents, making the sector increasingly attractive to investors," he said.

The CML also said the number of homes repossessed by mortgage lenders in the last three months of 2012 was the lowest since 2007, but a greater number of households ended the year struggling with large arrears.

There were 7,700 properties repossessed in the fourth quarter of 2012, down from 8,200 homes in the previous three months, and the lowest three-month figure since the fourth quarter of 2007.

The CML said the figures showed lenders were trying to keep borrowers in their homes and are only taking possession "as a last resort".

In total, there were 33,900 repossessions in 2012, down 9% from the 37,300 repossessions seen in 2011.

Mortgage arrears cases were also down, with 157,900 households ending 2012 with arrears of 2.5% or more of the mortgage balance, compared with 161,400 at the end of 2011.

However, the number of households in arrears equal to 10% or more of their mortgage balance increased, from 28,200 at the end of 2011 to 28,900 at the end of 2012.

"Households fall into difficulty for a variety of reasons, most of which cannot be anticipated," Smee said. "Wherever possible, lenders will work with borrowers to manage periods of temporary financial difficulty and enable them to keep their home. Anyone worried about their situation should talk to their lender, who will try to help them."

Harris said borrowers in trouble should ideally seek help before they miss a payment. "Many households are still struggling financially," he said. "While base rate is expected to stay at 0.5% for the foreseeable future, there are thousands of people who have already got into difficulty and are struggling to get out of it.

"Only those with significant equity cushions can access the market-leading deals. Those up against it and in danger of having their homes repossessed don't have this luxury so can't remortgage on to the cheapest rates. Subsequently, some homeowners are getting into difficulty paying their mortgage on top of high living costs, low wage rises, and in some cases losing their jobs."

Repossessions made by second-charge mortgage providers were also down in 2012, according to the Finance & Leasing Association. The repossessions, which can be ordered on the back of failure to repay any secured debt, fell by 24.1% in 2012 from 827 to 628.

Click here to read the original article: "Buy-to-Let Lending Bounces back as Landlords Cash In on Rising Rents"

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Letting Agents: New Laws Needed to Protect Tenants and Landlords, says OFT

The government should consider new laws for lettings agents to improve the rights of tenants and landlords, the Office of Fair Trading has said.

The recommendation, which follows a review of consumer complaints about the burgeoning private rental market, comes alongside a call for lettings agents to be forced to provide a full tariff of charges before a tenant signs a contract.

The move to renting has been swift in recent years, as high house prices and stricter mortgage lending criteria have made it increasingly hard to get on the property ladder – in 2010/11 3.6 million households in England were renting, up 2 million on 1999's figure. According to the Council of Mortgage Lenders, 2012 saw the number of buy-to-let loans taken out jump by a fifth.

As the numbers of landlords and tenants have increased, so complaints have grown, with the Property Ombudsman seeing a 26% rise in inquiries between 2010 and 2011.

"This is a market where large numbers of landlords may lack expertise, and the complexity of housing law means tenants may not understand their rights and obligations properly," the OFT said.

"Agents can cause problems where they exploit customers' behavioural biases by not being transparent about their fees or what they have on offer … Further, agents' interests are not always aligned with those of landlords who instruct them or the tenants who may rely on them for guidance."

The regulator reviewed about 4,000 complaints made to Consumer Focus in 2011. It found that 1,557 involved fees and charges, 1,211 were about agents providing poor service, and 1,015 were about deposits.

The OFT said some of the complaints concerned "surprise" charges which were introduced or "drip-fed" once contracts have been signed. These included things like administration fees, and fees for checking in and out of a property.

It said some of the problems could be solvable if agents complied better with existing consumer protection legislation, but that government, industry, enforcers and consumer bodies needed to take action to empower tenants and landlords.

Among its recommendations were:

• Better compliance with legislation and in particular better upfront information. "Ideally we would like fees to be set out in a clear tariff of charges at the start of the process, and certainly before any contract is signed."

• A general redress mechanism so landlords and tenants can sort out problems when they occur.

• More consistency within the industry so common principles are applied throughout the industry, such as what information is used for pre-tenancy checks.

It also urged the government to consider "whether the level of consumer protection law coverage is right in the context of the lettings market, and if not whether any legislative changes should be made to deal with this."

The OFT said that by the end of the year it would produce and consult on a document providing guidance for letting agents on what constitutes unfair contract terms.

Cavendish Elithorn, senior director of goods and consumer at the OFT, said: "Our findings show that tenants and landlords are often dissatisfied with their agents, but we also know most agents want to do the right thing.

"It's important that tenants ask for key information, but we also believe that government, industry and enforcers working together can have a real impact and improve overall standards in the lettings market."

The consumer group Which? described the recommendations as "a step in the right direction", but said the government and lettings agents needed to go further.

The group's executive director, Richard Lloyd, said: "Information on compulsory fees should be provided upfront, in adverts, or at the first point of contact with an agent so people can shop around.

"And the government must act quickly to require all agents to sign up to a complaints scheme so tenants know where to turn to for redress when things go wrong. This should be done by amending the enterprise bill currently before parliament."

Click here to read the original article: "Letting Agents: New Laws Needed to Protect Tenants and Landlords, says OFT" 

Time for Agents to get Fired Up over Lettings Fees

We are pleased to republish the following article from Morgans Estate Agents in Leeds.

"With a Which? report stating that tenants are playing ‘renting roulette’ and a recent RICS report suggested that the private rented sector was the ‘Wild West’ of the property market, there is mounting pressure on the Government – especially from homeless charity Shelter – for a total ban on all fees charged by letting agents and Morgan believes that the industry should be working with the Government to formulate a sensible approach to the problem.

What’s happened in Scotland is staggering – to totally ban all letting agent’s fees makes no sense at all – there is a substantial cost associated with running a lettings business and staff can’t carry out viewings, inventories, check references and complete other administration tasks for free. The Scottish media is also claiming that lettings fees charged have been illegal and they are pushing for PPI-style payouts, which is just absurd. These fees have not been ‘mis-sold’ they are simply part of the lettings process.

It’s essential that our Government doesn't panic and feel forced into re-structuring the entire lettings industry because of a media campaign. Any reputable letting agent would agree that a fair and transparent approach to fees charged is required but unfortunately there are unscrupulous operators in this industry and their bad practice is tainting everybody else.

The Government needs to consult with lettings agents and those campaigning for a ban on fees to reach a mutually beneficial outcome. Letting agents have to make a profit in order to employ staff, service landlords and find and manage properties for tenants, and of course those tenants must be given a clear and simple explanation of any fees they are paying.

At the moment all agents can do is voluntarily sign up to RICS or ARLA but as the Which? report has proven, the majority of tenants and landlords don’t even know who these bodies are or what they do. The only way forward is a consultative approach that provides an outcome that will protects tenants, landlords and agents.

We are already in discussion with Leeds MP Hilary Benn, Shelter and one of the UK’s biggest firms of lettings agents – Countrywide – and hope to arrange a forum in which we can all talk openly and honestly to find a solution, and I am keen for any agents who want to be involved to get in touch."

Click here to read the original article: "Time for agents to get fired up over lettings fees"

Second Council to Introduce Mandatory Licensing for all Landlords

A second major English council has announced plans to introduce mandatory licensing for all landlords who own property within their authority. Liverpool City Council are about to start a consultation period with the intention to bring in mandatory licensing throughout the city in early 2014.

Last year the London Borough of Newham became the first English Council to introduce a mandatory licensing scheme for all landlords in their area. At the time NetRent predicted that other councils would follow their lead. Liverpool is the first Council to announce their plans. They will not be the last.

Scotland has had mandatory licensing for all landlords for several years. However the success of this scheme has recently been seriously questioned by the Scottish Conservatives who calculated that identifying each rogue landlord has cost £410,000. They also claim that just running the registration website costs £300,000 a year.

This is the type of scheme Labour leader Ed Miliband wants to see rolled out in England and both the Welsh Government and the Northern Ireland Assembly say they want to follow suit. Meanwhile it seems clear that English Councils will introduce their own licensing schemes.

There is no doubt that Councils can generate significant income from Landlord Licensing, although they and the Scottish Government claim that this is not the reason for introducing such a scheme. They claim that mandatory licensing helps them identify and deal with rogue landlords.

The reality is that good landlords will be forced to pay to police bad landlords.

Click here for more information about the proposals by Liverpool City Council
Please note that Liverpool CC have informed us that the consultation has not started yet.

Click here for more information about the London Borough ofNewham licensing scheme

Click here to read more about the cost of licensing landlords in Scotland

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More Private than Social Tenants in England

For the first time since the 1960s, there are more people in England renting from private landlords than from councils or housing associations.

The English Housing Survey for 2011-12 shows that the rising number of private tenants, 3.84 million, outnumbered the 3.8 million in social housing.

The trend partly reflects the boom in buy-to-let ownership.

It also reflects increasing demand for rented homes from a rising population and those locked out of home ownership.

But the report, published by the Department for Communities & LocalGovernment (DCLG) pointed out that home-ownership, although still in decline, still accounted for roughly two-thirds of all homes in England.

"Owner occupation remained the largest tenure group with 14.4 million households, comprising around two-thirds (65%) of all households," it said.

"There has been a downward trend in the proportion of owner occupiers since the peak of 71% in 2003 but the proportion in 2011-12 was very similar to that in 2010-11," it added.

Simon Rubinsohn, chief economist at the Royal Institution of Chartered Surveyors (Rics) said these trends would persist in the coming years.

"The figures provide further evidence of the shift away from owner-occupation in favour of the rental sector," he said.

"Provisional data for the last financial year puts the proportion of households in their own property at the lowest point since 1987.

"Meanwhile, an increasing proportion of the population is turning to the private rented sector for shelter with the latest figures showing this form of tenure overtaking the social rented sector last year," he added.

Post-war shift

The last time there was a switch in the balance between private renters and those in council or housing association homes was in the middle of the 1960s.

The post-war slum clearance programmes and the government inspired boom in council house building provided new homes to rent for millions of families.

In 1961, the declining number of private tenants in England still outnumbered the rising number of social tenants by 4.7 million to 3.2 million.

Ten years later, in 1971, the position had reversed and social tenants outnumbered renters in private accommodation by 4.6 million to 3.2 million.

The peak year for council or housing association tenancies was in 1981 when there were 5.6 socially-owned properties in England - most owned by local authorities.

Click here to read the original article: "More Private than Social Tenants in England"

Landlord’s Anger at Messy Tenant

A Landlord from South Tyneside has spoken of his anger over the state his property was left in. Colin Campbell, who owns a number of properties in the borough, was renting out an upstairs flat in Broughton Road, South Shields. 

The private landlord says he learnt through a third party that the tenant intended to move out. The 59-year-old asked for the keys to the flat, but the tenant simply left the keys with a nearby shopkeeper.

Mr Campbell, who lives in Cleadon Meadows, Cleadon, says that he went to inspect the property and was disgusted at the mess it was left in.

He said: “I did have a spare set of keys, but the tenant had locked herself out a while ago and asked to borrow the keys and she never gave me them back.

“I’d asked her if she was leaving and she said she was. I tried to arrange to go round but she never got back to me.

“It was only by chance that I popped into the shop and the shopkeeper told me she’d left the keys there.

“I went round and I couldn’t believe the mess she had left it in.

“I’ve been a landlord for 25 years and this is definitely in the top three worst states I’ve ever seen.”

He added: “The bedroom was covered in rubbish, the kitchen was a mess, the settees were overturned and there was a mattress on the floor in the living room.

“The carpets were filthy and the plaster was coming off the walls, the curtains were hanging down and the rails were hanging off. I couldn't believe it.”

Mr Campbell says that it will cost him around £1,000 to get the property ready for another tenant to move in.

He said: “As a landlord you find that there are certain people who go from property to property and leave them like this.

“I don’t know how anyone can be happy to live like that.

“ I'm a member of the Landlord’s Association and I’ll be going to them to see if I can get her name blacklisted. It’s an absolute disgrace.”

Click here to join TenantVet now and help build a database that will help ensure that you never again hand over the keys to a tenant who will damage your property and your pocket.

Click here to read the original article: "Landlord’s anger at messy tenant"

Deposit Scheme to Avoid Disputes Between Tenants and Landlords

Northern Ireland is to have its first Tenancy Deposit Scheme, in a move to avoid disputes over deposits between tenants and landlords.

It will involve a third party holding onto the cash and mediating in disagreements, bringing NI into line with England and Wales.

The scheme, for private rentals, has been introduced by Social Development Minister Nelson McCausland.

But the Landlords Association said it would be too bureaucratic.

The assembly approved legislation for the independent third party scheme to protect tenant's deposits from 1 April.

Mr McCausland has appointed four administrators to operate the new scheme.

He said: "This scheme will provide assurances for tenants and protection for landlords, helping to minimise long drawn-out legal proceedings and disputes.

"Tenants across Northern Ireland in the private rental sector can now be afforded the same protection as those in Great Britain.

"This is a positive development for the private rental sector".

He said schemes such as this had been very successful in the rest of the UK adding that he was keen that the private rental sector was seen as a "good option for tenants".

"Return of tenant deposits is an issue I hear of time and time again and I'm pleased that Northern Ireland citizens can now be reassured their money is safe," he said.

"The new scheme... will encourage a more professional approach to tenancy deposit practice, minimise disputes and go some way to improving the sector's reputation as a desirable option."

However, Declan Boyle of the Landlords Association said he was not happy with the new plan.

"It's very onerous and the penalties here are going to be more severe than in the UK, for whatever reason," he said.

As part of the scheme, housing benefits will be paid directly to landlords.

To read the original article click here: "Deposit Scheme to Avoid Disputes Between Tenants and Landlords"