In a move that would help tenants who struggle finding deposits when moving to new rentals, The Conservatives have announced they will bring in legislation to enable deposits to be transferred, termed Deposit Passporting.
It is estimated there are around 4.7million tenants who have to find on average around £1,000 to put down as a deposit each time they move and enter a new tenancy. This money is required up-front, and often, because of delays and getting an existing deposit paid back, they have to find new money.
For those who struggle to raise these large sums, and to pay for the first month’s rent as well as the security deposit, sometimes running into thousands in the capital, this news will provide them with a boost and a relief.
The Tories are anxious to do all they can and help renters, knowing they now represent a growing cohort of young voters, so moves like this, they think, will prove very popular.
The idea is that tenants would be able to transfer their deposit from an existing landlord direct to a new landlord, without having to find a new lump sum themselves, apart from topping up any increase.
The Tories think the main beneficiaries will be those on low incomes, students and retirees who traditionally would find it hard to find these large sums of money at the start of a new tenancy.
Landlord groups and representatives have welcomed the move, but are concerned about the mechanics of the scheme and how this would work out in practice. For example, what if there’s a dispute over damage claims?
But landlords acknowledge that anything that makes it easier for tenants to obtain a new tenancy with sufficient and readily accessible funds, can only be a good thing.
The Ministry of Housing, Communities and Local Government (MHCLG) opened a consultation on the necessary reforms to tenancy deposits that will help tenants move more easily which closed on 5 September 2019. The consultation exercise will be evaluating the feasibility of passporting deposits when tenants are changing tenancies.
The National Landlords Association (NLA) has emphasised that deposit passporting needs to be carefully designed to ensure that landlords are not disadvantaged from making valid claims against their tenants’ security deposits.
Chris Norris, director of policy and practice at the NLA, said:
“We must make sure that adequate thought is given to the needs of both tenants and landlords. Everyone agrees that moving between tenancies should be made easier and cheaper, but we also need to recognise why landlords take deposits. A deposit protects against damage or default, so landlords must be confident their costs are covered before releasing the tenants’ money.”