Reform on the way for deposit schemes
5th September 2018
The issue of deposits has been causing concern for letting agents and tenants for years, but the government is now taking action to implement a fairer system for everyone involved. Historically, deposits have been high, and tenants moving between properties have often been penalised by having to make a new deposit payment before the deposit on their previous property has been returned. In fact, Which? reports that one in six tenants are forced to wait for more than four weeks to get their deposit back and that this causes around 43% of renters to go into debt when they move.
Among new measures being debated are the idea that security deposits should be capped, a contentious move for landlords who of course need to have a level of protection, and that the deposit level cap should be reduced to three weeks’ rent from four. This latter is also controversial as it could lead to behavioural change among tenants who may feel ore able to forego the deposit and switch properties more often.
Which? identifies ‘cleaning’ as the most common cause for deductions from deposits, with more than 50% of tenants confirming that they had lost money for that reason. Alarmingly, 80% of those who had faced cleaning deductions felt that they were being unfairly penalised. One in ten renters reported that they had received no explanation for a deduction from their deposit, and only a third who appealed against the decision were happy with the deposit scheme.
As Andrew Ward, owner of Award Property Management, letting agents in Cambridge, observes, the key here is to strike a balance which suits both parties. ‘At Award we focus on building strong relationships with our landlord clients and working with them to ensure their tenants are well looked after. In our view, the best outcome for both sides is a level of transparency and fairness which enables our landlords to enjoy the rewards of the buy-to-let sector while maximising occupancy with contented tenants.
‘We’ve always felt that deposits need to be sensibly applied. Of course landlords need protection for their asset, but by the same token tenants need to feel confident that their deposit is being set at a level which doesn’t preclude them from moving on at the end of the tenancy and that it will be returned to them in a timely manner. It’s also vital that everyone understands what the deposit is for and why deductions – if any – might be made at the end of the tenancy. The majority of our landlord clients ask us to oversee deposits and ensure that everything is processed in a professional manner because they know that we will communicate clearly with their tenants to avoid any misunderstandings. The fact that we are members of the TDS Tenancy Deposit Protection Scheme and all of the deposits we take are therefore protected under the scheme regulations also inspires confidence on both sides.’
Award Property Management are letting agents in Cambridge, so if you’re looking to rent your property why not contact us for an initial chat? We’d love to hear from you.