Hello Saul,
I have looked into this in detail, it will affect everyone who takes deposits from October 2006. Basically you have two choices, use a Custodial scheme or an insurance backed scheme. With the custodial scheme you must deposit bond within 14 days of receiving it and notify tenant it is done. At the end of tenancy assuming both parties agree bond will be refunded to tenant or split if agreed otherwise. If no agreement is made no payment will be made to either party, until agreement has been made or court decide. This scheme is likely to be free as they expect any charges to be funded from interest on money held. Any interest over and above a rate specified by government will be paid back with bond.
With the insurance scheme you can hold deposit but you must notify tenant of which deposit scheme you belong to. If there is a dispute at end of tenancy you must pay all of money to the insurance scheme within 10 days , it again remains held until dispute resolved or a court decides.
If you fail to join either scheme then there is penalties, one being you cannot use accelerated possession procedure.
We have decided not to use either scheme, instead we are going to stop taking bonds, instead we are charging a non refundable admin fee of ?200, and insisting on a guarantor, no guarantor, no tenancy.
cheers
Mathew