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Deposit cap risks leaving landlords out of pocket at the end of the tenancy

Plans to cap the security deposits that tenants leave with landlords or their letting agents at no more than six weeks rent will increase the temptation for tenants to view the deposit as the last month’s rent, leaving landlords out of pocket at the end of the tenancy if, for instance, the property has been damaged, according to the Residential Landlords Association’s (RLA).

Research by the landlord body has found that 40% of private landlords have faced tenants not paying their final month’s rent in the past three years.

The new cap, proposed in the government’s Draft Tenant’s Fees Bill, was initially announced in November 2016 during the chancellor’s Autumn Statement.

Initially the cap was to be for four weeks, but the government later decided to increase it to six weeks after listening to calls from the property industry.

But now the RLA is urging the government to increase the deposit to eight weeks to cover the costs if the final month’s rent is not paid and to ensure there are sufficient extra funds to deal with any major problems some tenants leave behind.

The RLA is also warning that the Bill risks becoming a missed opportunity to improve the position of tenants. It is calling for proposals to enable tenants to transfer deposits from one home to another rather than having to raise fresh funds each time they move as they wait for their last deposit to be paid back.

The RLA would also like to see papers confirming that deposits have been protected sent to tenants electronically which currently cannot happen.

David Smith, the Policy Director for the RLA, said: “Ministers need to address the problem of tenants failing to pay rent every bit as strongly as rogue landlords. It is not unreasonable that landlords should have the security to know that funds are available to cover the unacceptable practice of those tenants who do not pay their rent at the end of the tenancy and, in some case, leave the property in an unacceptable state.

“In a quest for quick popularity, the Government’s plans risk becoming a missed opportunity for fundamental reforms to improve tenants’ ability to access rented housing.”

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    the way i see it there are 2 ways around this, 1) build the extra deposit into extra rent to cover ourselves, 2) in the event of a tenant not paying their last month's rent county court them, we may well not get our money but if we all do this we will screw their credit rating making it very difficult for them to rent another property or get a loan.

  • Peter David

    We have to raise the rents to cover this as tenants just leave the place in a mess and they fail to pay last months rent so that we can take it from the deposit which leaves us short. Hence therefore we push up rents to cover both this behaviour and the infantile legislation which seems to endorse it. What a pointless dance.

  • icon

    It is getting beyond a joke this interference for political gain. What they don’t realise is that we (landlords) are business people who will adapt its the end user who will suffer who ironically are the people the stupid government want to help. Stop meddling and leave the industry to be run by professionals who understand it.

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