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.”