Rental Deposits:

Plans to cap security deposits for private rented housing to six weeks rent risk creating a charter for rent cheats warns the country’s leading landlord body.

Research by the Residential Landlords Association’s (RLA) has found that 40 per cent of private landlords have faced tenants not paying their final month’s rent in the past three years.

The new cap is proposed in the Government’s Draft Tenant Fees Bill and the RLA is calling for this to be increased to eight weeks to cover the costs if the final month’s rent is not paid and to ensure there are sufficient extra funds to deal with any major problems some tenants leave behind.

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The RLA is also warning that the Bill risks becoming a missed opportunity to improve the position of tenants. It is calling for proposals to enable tenants to transfer deposits from one home to another rather than having to raise fresh funds each time they move as they wait for their last deposit to be paid back.

It also wants the tenancy deposit process to be brought into the 21st Century by enabling papers confirming that deposits have been protected to be sent to tenants electronically which currently cannot happen.

The Office for Budget Responsibility has again warned that plans to ban letting fees paid by tenants could lead to rent rises as a result of fees being passed on.

Commenting, David Smith, the Policy Director for the RLA said:

“Ministers need to address the problem of tenants failing to pay rent every bit as strongly as rogue landlords. 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 research findings are contained within a report by the Residential Landlord Association’s (RLA) research exchange, PEARL. Almost 3,300 landlords responded to its questions.

The Residential Landlords Association: The home for landlords

  • The RLA represents the interests of landlords in the private rented sector across England and Wales. We’re home to over 50,000 landlords nationwide, with a combined portfolio of over a quarter of a million properties.
  • RLA PEARL’s report, The Impact of Taxation Reform on Private Landlords, is available here – Page 23 notes: “The next question asked landlords whether they had ever experienced their tenants not paying their final month’s rent in the past three years. The majority of landlords responded that they had not experienced this (60%), however, at 40% of landlords who have experienced this, this is still a significant issue.”
  • The Office for Budget Responsibility’s Economic and Fiscal Outlook for March 2018 can be accessed here – Page 94 notes, “it is possible that a ban on fees would be passed through to higher private rents. If this was the case, it could affect our housing benefit spending forecast.”
  • The RLA’s written evidence to the Housing, Communities and Local Government Select Committee inquiry into the Draft Tenant Fees’ Bill can be accessed here

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