Tenants’ Deposits Could be Capped, Saving Hundreds
- Deposits could be capped at 5 weeks
- Larger sums cause financial difficulty for renters
- Draft of Tenant Fees Bills is being debated in Parliament
Rental sector tenants’ security deposits should be capped at five weeks’ worth of rent, a committee of MPs has urged.
The Housing, Communities and Local Government Committee made the comments in a report on the Government’s draft Tenant Fees Bill.
The draft bill aims to make renting in the private rented sector fairer and easier for tenants by introducing a ban on fees imposed on tenants by landlords and letting agents.
Housing costs are already going to be more expensive this year as Council Tax is rising, so cutting the cost of a deposit could be a valuable saving.
With increasing numbers of people living in the private rented sector, it supports the aims of the draft Bill and broadly supports the proposed legislation.
Clive Betts, the Chair of the Housing, Communities and Local Government Committee, said, “With more and more people living in private rented sector, this legislation has the potential to make a difference to millions of people by cracking down on unfair fees and saving tenants hundreds of pounds.
“We believe, however, that there are clear improvements that could be made to the Bill that would ensure it has a much better chance of delivering on its aim of making renting fairer and easier
“Lowering the cap from six weeks’ worth of rent to five will help make the private rented sector much more affordable, while also keeping protection for landlords from rogue tenants.”
The draft Bill proposed prohibiting payments, with the exception of rent, on security deposits of up to six weeks’ rent, holding deposits of up to one week’s rent, and default fees.
It said that security deposits should be capped at the equivalent of five weeks’ rent in recognition that finding six weeks’ worth of rent can cause financial difficulties for tenants.
By reducing the cap on security deposits, the private rented sector would become more affordable while also protecting landlords from rogue tenants.
The rise in house prices and the cost of renting has led some to take up alternative lifestyles to cut costs.
The committee also said landlords should not be able to retain the full holding deposit if a tenant fails as a reference check, despite providing accurate information.
Landlords should only be allowed to retain the full holding deposit if the tenant knowingly provides false of misleading information.
The Government estimates that the average household in the private rented sector will benefit by between £18 and £50 a year from the reforms, but the committee said it had heard that tenants could benefit by much more.
A Ministry of Housing, Communities, and Local Government spokesperson said, “We are determined to make renting fairer and increase protection for tenants.
“This important legislation will ensure that they are not his with surprise fees or required to pay more than their rent and a refundable deposit.”
However, not all the responses to the bill have been positive, as there are some concerns over how selective landlords and agents will become.
David Cox, chief executive of letting agents’ body Arla Propertymark, said, “This will result in agents only selecting the very best tenants to avoid the possibility of incurring costs through tenants failing referencing.
“Ultimately, this will reduce the availability of property for vulnerable tenants and families.”
Do you think a cap is a good idea? Let us know in the comments.