Government plans for deposit passporting

by Property 118

9:17 AM, 28th June 2019
About 4 weeks ago

Government plans for deposit passporting

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Government plans for deposit passporting

More than 4 million people live in the private rented sector, yet when moving home, some tenants can find it a struggle to provide a second deposit to their new landlord, risking falling into debt or becoming trapped in their current home. Ministers want to understand the scale of this problem.

Ministers are inviting proposals to make it easier for renters to transfer deposits directly between landlords when moving from one property to the next.

Freeing up deposits and allowing a renter’s hard-earned cash to follow them from property to property as they move to take that perfect job, to move nearer to family, or find a place that suits their changing needs will create a fairer housing market that works for all.

Director of policy and practice at the NLA, Chris Norris, said: “The idea of deposit passporting has been around for a while now, so it comes as no surprise that the Government is considering it. Mr Brokenshire acknowledges that if this is to be implemented it must be done thoughtfully, but we must make sure that adequate thought is given to the needs of both tenants and landlords.

“Everyone agrees that moving between tenancies should be made easier and cheaper, but we also need to recognise why landlords take deposits. A deposit protects against damage or default, so landlords must be confidence their costs are covered before releasing the tenants’ money.”



Comments

Gromit

14:05 PM, 28th June 2019
About 4 weeks ago

The Deposit means that the Tenants has some "skin in the game", and is more likely to look after the property, and furnishing (if provided). Even if you do not try to dispute any damage.
If at the end of a tenancy they can just walk away with no comeback then they will.

Taking a Deposit also demonstrates they have the wherewithal to get a Deposit together.

Yvette Newbury

15:45 PM, 28th June 2019
About 4 weeks ago

Reply to the comment left by Paul Maguire at 28/06/2019 - 12:54
Presumably you mean you "used to take 2 months up front" as now you can no longer do this?

Ian Narbeth

17:10 PM, 28th June 2019
About 4 weeks ago

Reply to the comment left by Paul Maguire at 28/06/2019 - 12:54Paul you run the risk of the "last month's rent" being treated as a disguised deposit. If a tenant signs a 12 month lease on 1st July 2019 and pays for first and last month's rent, the obvious point is that the rent due on 1st June 2020 is not yet due. It looks like a disguised deposit and needs to be registered and Prescribed Information served.

You have additionally created the problem for yourself that the tenant is not liable to pay again on 1st June 2020 so you have no security if there is damage to the property. We have successfully taken money from deposits for damage to furniture, missing items, burns on carpets, plaster damage and damage to paintwork. Deposits are useful.

Paul Maguire

18:17 PM, 28th June 2019
About 4 weeks ago

Hi Ian. I'm in Scotland so there's no minimum nor maximum lease period allowed. I've always returned deposits as any damages during the tenancies [HMO, by the room] are easily covered by "wear and tear"....in my view, let alone a Court's. The tenants have the same sum to pay upfront and after a few years of using the Deposit Protection Scheme I concluded that [in my particular circumstance] it was only of benefit to the Scheme.

JB

18:34 PM, 28th June 2019
About 4 weeks ago

Reply to the comment left by Ian Narbeth at 28/06/2019 - 17:10
I agree with Ian, that deposits are useful, particularly if using it to pay the last months rent (which cannot be disputed) and acts as a deterrent.

Jireh Homes

18:52 PM, 28th June 2019
About 4 weeks ago

Responded to the consultation, although no specific question which addresses the flawed concept! Encourage other landlords to engage and point out in a constructive manner the potential pitfalls.

Paul Shears

20:08 PM, 28th June 2019
About 4 weeks ago

Reply to the comment left by Mike at 28/06/2019 - 11:43
My reason for requiring a deposit is to keep the high risk tenants out.
Further, any tenant who cannot simultaneously have two deposits, one from the property they are leaving and one for the property that they are moving to, is not a tenant that I would want.
I would rather have a void however long it goes on for.

David Price

8:19 AM, 29th June 2019
About 4 weeks ago

Reply to the comment left by Ian Narbeth at 28/06/2019 - 17:10
Ian, surely the distinction between a deposit and rent in advance is that the latter can only be used for rent not dilapidations? At the same time I concur that judges can be extremely perverse in their interpretation, but no nearly so perverse as Shelter/CAB lawyers.

Jim S

9:32 AM, 29th June 2019
About 4 weeks ago

Reply to the comment left by Mike at 28/06/2019 - 11:43
I agree with you entirely, how great it would be if the Government were to ban deposits because then all landlords would operate on a level playing field. Obviously the rent would go up to cover all of the debts that we would incur but at least we would not be getting screwed over by the deposit protection schemes and the associated paperwork problems. We would then all effectively be forced to go to court to get any money that we were due.

PJB

9:48 AM, 29th June 2019
About 4 weeks ago

Agreed. The most important time for a deposit is the contribution to repairs and dilapidations after the tenant has left the property. The second most important time for a deposit is paid to the new landlord at the time of signing the new tenancy agreement. Two deposits are needed at the same point in time.

The analogy that springs to mind is that is a person may be committed to buy a property but hasn’t been able to sell their old property in good time. If the deal isn’t going to fall through then a bridging loan is required. The issue here is the same but on a much smaller scale.

Repurposing (ugh) the security deposit is not viable but an opportunity to provide specific deposit bridging loans is. Letting agents are currently suffering with the Tenant Fees Act, providing deposit bridging loans may help.

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