Please Note: This Article is 4 years old. This increases the likelihood that some or all of it's content is now outdated.

Deposit Cap:

Amid all the talk about cracking down on (rogue) landlords, the responsible landlord’s voice is often drowned-out – what about those rogue tenants who the media seem to think have ceased to exist?

The RLA claims that a move to cap deposits at 6 weeks’ rent could end up helping rent cheats.

As any experienced landlord knows, it’s a common practice that, at the end of a tenancy, some tenants will cheekily stop their last month’s rent payment. Fearing the landlord may retain their deposit, these tenants think they’ll get their move in first and stymie the landlord in this regard, leaving the landlord with no protection for any damage that may be revealed when the tenants leave.

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What makes matter worse is that often the landlord does not even hold the deposit money as it’s placed in a custodial deposit protection scheme and won’t be released until the tenant agrees to it. So not only does the landlord “sing” for the last month’s rent, he’s lost his deposit damage protection – the whole idea of a damage deposit in the first place.

This is the reason most landlords ask for at least 6 weeks’ rent deposit, and sometimes 2 months (in case there are additional risks like pets), so that the amount does not exactly equal a month’s rent. This does at least give some protection.

Furthermore, The Sun newspaper claims to have seen a leaked copy of the Housing, Communities and Local Government Select Committee‘s report into the government’s Draft Tenant Fees Bill, which recommends that the maximum security deposits be reduced from the planned six weeks to just five weeks.

Taking more than two month’s rent does have some legal consequences as it can be interpreted as giving the tenant authority to assign (most ASTs bar this) should the tenancy be or become a contractual periodic tenancy.

The cap, set to be introduced in the Draft Tenant Fees Bill, could be seen as a “charter for rent cheats”, says they RLA, which it claims is supported by their research showing how 40% of private landlords have reported their tenants not paying their final month’s rent, in the past three years.

This Bill is designed to make renting fairer and more affordable for tenants. Other measures being proposed include having a lead enforcement authority in the Private Rented Sector, and allowing tenants to see all fees and costs upfront before they rent a given property.

But by reducing security deposits, the RLA says, landlords will suffer financial losses if faced with tenants fail to make regular rent payments, and those who leave properties in disrepair.

David Smith, policy director for the RLA, says:

“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.”

The RLA would like the cap for security deposits to be set at eight weeks as opposed to the suggested six. It also thinks that the current deposit system should be overhauled so that deposit funds can be transferred from one private rental property to another landlord, if the tenants move house, rather than tenants having to raise a new deposit and await the repayment of their last one.

Draft Tenant Fees Bill

Please Note: This Article is 4 years old. This increases the likelihood that some or all of it's content is now outdated.


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