The government’s intention to reform rental deposits has been broadly welcomed, but one letting agent believes that they should be abolished altogether.
The chancellor George Osborne said last week that the government is looking at what it can do to make sure that people who rent have “proper consumer protection, including protection from landlords who withhold deposits unreasonably”.
However, Ajay Jagota, CEO and founder of Keep It Simple Group (KIS), thinks that a more effective way to improve the private rented sector would be for monetary deposits to be scrapped.
His firm KIS were the first letting agents to abolish monetary deposits, replacing them with a one-of-a-kind insurance policy. He is also founder of dLighted, an insurance backed deposit-free renting solution offering up to £7,500 of cover for agents.
He said: “The simplest and most effective solution to guarantee a better deal for renters is to abolish deposits and move the private rented sector towards the insurance-backed model used in almost every other industry on the planet.
“Study after study concludes that they are the biggest barrier to entering and moving house in the private rented sector, with our research showing the average renter needs to stump up more than £1,000 to get the keys to a new home before they’ve even paid the first month’s rent.
“But time and time again policymakers ignore this in favour of the same old cul-de-sacs and clichés like banning of letting agent fees or rent controls.
“Not only would abolishing deposits mean the £3.2bn being release into the wider economy, £2bn of which is literally just gathering dust and interest right now, it would make it easier for renters to move house, easier for them to keep a house and easier for them to save for a property of their own.
“A survey recently showed that 78% of renters want greater protections from their landlords – this is the simplest and most effective way of giving them that piece of mind.”