Draft Housing (Tenancy Deposit Schemes) Order 2026

Debate between Andrew Snowden and Matthew Pennycook

Monday 2nd November 2026 General Committees

[Matthew Pennycook]

My hon. Friend helpfully brings me on to the two further points I wanted to respond to, which the shadow Minister, the hon. Member for Orpington, rightly probed: essentially, how will the amounts due to the Secretary of State be determined, and what specifically do we intend to spend them on? I cannot confirm to my hon. Friend today what the amounts due to the Secretary of State will be. As I have said, the order allows for the distribution mechanism to vary, taking into account market conditions such as interest rates. Specific arrangements would depend on commercial negotiations with prospective scheme administrators.

I can commit that, first and foremost, the distribution mechanism will prioritise ensuring that the deposit protection and dispute resolution services offered to tenants and landlords continue to be free and effective. I assume we would all agree that that is particularly important. My Department will set key performance indicators and cost-efficiency metrics to monitor the scheme administrators’ delivery. If the interest accrued exceeds the minimum cost of meeting the key performance indicators, the additional amount of interest will be distributed between the administrator of the scheme, tenants and/or landlords, and the Secretary of State. When setting the distribution mechanism, the Secretary of State intends to allow the scheme administrator to keep a reasonable amount of profit as a reward for the service delivered. It is not the Secretary of State’s intention to exploit the tenancy deposit system and agree to arrangements that leave tenants and landlords worse off.

As for what we intend to spend any money received on, the Government have demonstrated their commitment to improve conditions for tenants in the private rented sector. Although a specific programme or programmes cannot be confirmed at this stage, it is our intention to use any receipts to fund Government programmes to benefit tenants in the sector. It is important to say that it will take time for interest to accumulate and be paid to the Secretary of State under future arrangements, if we decide to make use of the power. Those arrangements will depend on market conditions and priorities for the private rented sector, and will be subject to agreement from the Treasury.

[Mr Snowden]

Going back to the threshold point, can the Minister give any indication of what level interest rates would have to reach to trigger this, based on the Department’s calculations in crafting this statutory instrument? If it is a windfall from high interest rates generating additional revenue, what general ballpark does the Minister think interest rates would have to be at to trigger this?