Mystery as Capita pulls out of tenancy deposit market after six months

Capita has withdrawn from the tenancy deposit protection market – just six months after entering it.

Mystery surrounds the withdrawal. The reasons are not known and no statement has been made. The firm would almost certainly have signed a three-year contract with the Government authorising it to run a scheme.

Capita says on its website: “Capita Tenancy Deposit Protection is no longer accepting new deposits. Any deposits registered with the scheme will continue to be protected unless otherwise notified. Landlords, agents and tenants who are affected have been notified in writing.”

Capita’s scheme was approved by CLG and launched in England and Wales on April 1. It also launched into the Northern Ireland market.

Capita was only the fourth tenancy deposit scheme to be approved in England and Wales, and was an insurance-backed model available to both landlords and agents. Prices started from £15 for landlords and £9.50 for letting agents, and alternative dispute resolution was offered via Ombudsman Services.

The service, headed up by managing director Gareth Kings, was also open to “non-regulated” agents – agents who are not members of a body such as ARLA or NALS. However, unaffiliated agents had to pay more at £30 per tenancy.

Capita itself is a FTSE 100 firm.

Steve Harriott, chief executive of the Tenancy Deposit Scheme, said: “It is clearly a surprise that only six months into a new contract, one of the entrants has chosen to withdraw at such an early stage.

“What is important, though, is that any disruption caused to tenants and landlords is kept to a minimum.”

DPS director Kevin Firth said: “We are not surprised Capita have announced their withdrawal from the Tenancy Deposit Protection market.

“New entrants will find much or all of the business has been taken by established and competitive suppliers.

“That, coupled with very high start-up costs, makes the risk unacceptably high for most potential entrants.”