Generation Rent has urged the government to force landlords to hand back deposits quickly, fine them if they make fake damage claims, and stop them “holding cash hostage in dodgy insurance-based schemes”.

The tenant group’s new petition – Give renters’ deposits back quicker - has 15,869 signatures and hopes to convince it to introduce changes to the deposit system.

Housing Minister Matthew Pennycook recently gave a clear indication that it is considering a future tenancy deposit protection system based entirely on custodial schemes by talking about the “proposed removal” of insured schemes.

Generation Rent acknowledges that although those who challenge landlords’ claims on deposits through protection schemes get 79% of their deposit back, schemes that allow landlords to hold on to the money themselves, while paying to insure it, means dodgy landlords “can hold the entire deposit hostage while negotiations or adjudication takes place”.

Scrapping

Scrapping the insurance-backed schemes completely and holding all renters’ deposits in the remaining custodial schemes, would make it easier to update the rules and ultimately return the money to its rightful owner, says the group.

Generation Rent believes having a time limit for tenants to request their deposit back at the end of the tenancy and not requiring landlords to pay undisputed money to the tenant while a dispute is being adjudicated gives them leverage to make unreasonable deductions. In extreme cases, landlords can drag their feet so much that once the deadline has passed it’s too late to raise a formal dispute, and the landlord pockets it all.

It estimates that 296,000 renter households lose out on hundreds of pounds due to these tactics every year.

Rules

Dan Wilson Craw, deputy chief executive at Generation Rent, says that while the government looks at potentially changing the rules, it should spell out to bidders that delayed return of deposits is unacceptable.

“It should be the landlord’s responsibility – not the tenant’s – to make a claim on the deposit if they have the grounds, and to do this within two weeks of the tenancy’s end, or the scheme returns the cash to the tenant,” he tells the Big Issue.

“The government should also go further and penalise landlords who repeatedly make exaggerated claims that are rejected by the dispute process, to discourage this practice and further bolster trust among tenants in the system.”

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