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TODAY'S OTHER NEWS

Tenancy deposit cap will ‘eventually affect a significant proportion of properties’

More than four out of ten tenancy deposits managed by the Deposit Protection Service (DPS) are currently higher than the recently introduced tenancy deposit cap.

Since 1 June 2019, most new assured shorthold tenancy deposits in England have been capped at five weeks’ rent where the total annual rent is less than £50,000, or at six weeks when the yearly rent is £50,000 or more.

Although landlords are not compelled to apply the cap to tenancies that began before the deadline, they must adjust the deposit that exceeds the cap whenever an existing tenancy is renewed on a fixed-term basis.

According to the DPS, 42.81% of the deposits it currently protects stand above the cap.

However, it is worth pointing out that since the 1 June 2019, the proportion of deposits protected by The DPS that exceeded the cap decreased by 1.46% from 44.27%.

The DPS says this reflects the start of new tenancies with compliant deposits and landlords choosing to adjust proactively larger deposits for existing tenancies.

Matt Trevett, managing director at The DPS, commented: “Our figures show that the tenancy deposit cap will eventually affect a significant proportion of properties around the country.

“Landlords and letting agents should be ready to make the change whenever a relevant tenancy ends in order to fully comply with the law.

“Protecting a deposit with The DPS ensures both landlords and renters can have peace of mind during the course of a tenancy – and access to a free, impartial Dispute Resolution Service if they don’t agree when it ends.”

Poll: Do you think the tenancy deposit cap will eventually adversely affect your investment in the buy-to-let sector?

PLACE YOUR VOTE BELOW

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    DPS is rubbish. Asked for return of excess over capped amount and still waiting nearly 3 weeks. We have to return within 10 days as the rules dictate.

    Tenancy Deposit Scheme TDS

    Hi Steve, at TDS we have an online deposit cap solution where you can release the surplus of a deposit with one click on your database.

     
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    I have stopped using DPS many years ago as they did not release the full deposit to my tenants for over a month and in one case it was like 2months. My tenants were crying and since then I stopped using DPS

  • Daniela Provvedi

    I don't like the DPS. As a RLA member, I now just deal with the TDS.

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    Two months rent up front job done

    Paul Barrett

    Two month's rent upfront means more notice required to terminate a tenancy with the current S21 and S8 process.
    Not advisable

     
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    I have used the DPS for years without issue.
    One months rent is the norm to take for a deposit where I am based.
    No way would tenants agree to paying two months deposit anyway.

    Paul Barrett

    My tenants have no choice.
    Two months rent as deposit or no tenancy.
    Never been a problem for me.

     
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    However legally it’s now only 5weeks max we can take after that last min capitulation by 4 ovens Brokenshire. Insist on Home owning guarantor this solves majority of problems

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    Legally you are now only allowed to take maximum five weeks rent for deposit as Landlords you should be aware of that.

  • Paul Barrett

    It may well be 5 weeks deposit now but it is perfectly possible to beat the system legally.
    So a 6 month AST is issued with rent set at a level which includes 3 weeks deposit paid over 6 months.
    When the AST converts to a SPT or a CPT the LL attaches an appendix to the AST reducing the monthly rent to that which it would have been without the 3 weeks additional deposit.
    Then 6 months later a S13 rent increase may be issued if desired this as it is only fair to increase rent annually though of course it is possible with every new AST.
    But I consider that very sharp practice and have only ever increased rent annually.
    When the tenants leave should everything be OK they receive their 5 weeks deposit plus as a 'gooodwill gesture' the LL GIFTS them an amount that might be remarkably similar to 3 weeks deposit.
    This is perfectly legal as there is NO law that prevents LL making goodwill gestures to tenants or soon to be ex-tenants.
    The AST rent wasn't anymore in the first month compared to the remaining months of the AST which is specifically banned.
    At the expiry of a FTT a LL is permitted to do what they like.
    They could issue a new AST which reduces or increases rent or they can add an appendix to the expired AST now a SPT or CPT.
    No barrister could ever prove that when the tenancy ended and the deposit plus a 'goodwill gesture' was anything other than that.
    What the stupid Govt should have done was restrict deposits to no more than 2 month's deposit because if the dopey Govt knew anything about tenancy law they would know that taking more than 2 month's deposit created a Premium Tenancy which no sane LL would EVER wish to occur.
    So defacto LL for years have only been accepting no more 2 month's rent as deposit for fear of creating that Premium Tenancy
    But this is all basic stuff which any LL should be aware of.
    But 5 weeks deposit maximum is easily beaten legally.

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    Too complicated. Trust not Tricks. Why would you want more than 5 weeks rent as a SD?

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    Too complicated. Trust not Tricks. Why would you want more than 5 weeks rent as a SD?

    Paul Barrett

    Because 5 weeks is not enough.
    Of course if RGI was possible then 5 weeks would probably be OK.
    But with an effective 2 month's of deposit it gives the tenant 'skin in the game'
    Both tenant and LL have a greater commitment to eachother.
    Anything which would cause significant financial loss to a tenant who fails to comply with AST terms.
    This surely must be some sort of motivation for a tenant to be compliant with AST terms.
    Handing over the keys to a property of significant value for effectively 3 months of rent is peanuts.
    If the tenancy contract is complied with the tenant will receive the deposit in full when the tenant terminates the AST.

     
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    Dont like TPS either as they prefer tenants that lie even when presented with Inventory, Invoices, qualified individuals reports, photos dated and timed. Corrupt like DPS.

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    I don’t have Deposits they were taken away in 2007 by Shelter when they alleged LL’s withheld 44% of Deposits, it later emerged less than 2% went to Deposits Resolutions, so it came in on s pack of lies and anyway it’s now all about protecting the Deposit it self and nothing protecting the property. Do they not even know this and subsequently used in County Courts to undermine s21 if you were trying to get possession, as far as I am concerned they have now made it a liability not a protection. Well done keep on.

    Paul Barrett

    Not taking deposits is fair enough based on ALL you suggest.
    So thinking about it what is to prevent a LL pitching the rent at a price point which includes 2 month's of deposit.
    This to be payable over 6 months.
    Then the rent is reduced.
    At the expiry of the tenancy with everything being OK the tenant receives as a 'goodwill gesture' 2 month's worth of rent.
    So effectively a tenant can start a tenancy with just 1 month's rent in advance.
    Paying additional amounts monthly would not be a deposit.
    It is irrelevant if a LL chooses to make a 'goodwill gesture' at the end of a tenancy with tenants vacating.
    The advantage for tenants is they ONLY have to come up with 1 month of advance rent.
    It simply won't be possible to prove that additional rent paid monthly over 6 months was ever deposit payments.
    That wi avoid the stupid deposit schemes who ignore LL evidence regarding tenant caused damage etc.
    Most tenants would far prefer to be able to pay deposits over months rather than a upfront.
    So I would advertise as rent is so much but would be reduced after 6 months to a figure that would be remarkably similar to a reduction of 2 months rent as a deposit.
    As a business strategy it seems perfectly doable to me.
    Though if course if RGI is possible then bothering with all the extra hassle DOESN'T need to be bothered with.
    Trouble is very few tenants are able to qualify for RGI!

     
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