Head of landlord group slams claims of “greedy landlords” in deposit row

The head of a landlord association has hit back at the accusation of “greedy landlords clinging on to tenants’ money” through deposits.

An article in the Big Issue by Generation Rent claims landlords can make “unreasonable deductions to encourage renters to settle so they can get back at least some of their money sooner.”

However, the chief executive of the National Residential Landlords Association (NRLA), Ben Beadle, posted on X, formerly Twitter, calling Generation Rent’s comments “unhelpful nonsense”.

Government plans to remove insured deposit schemes

The government have previously announced potential changes to the tenancy deposit protection system, including plans to remove insured deposit schemes.

Under the Renters’ Rights Act, landlords must place a tenant’s deposit in a government-approved tenancy deposit scheme such as the Deposit Protection Service (DPS), MyDeposits or the Tenancy Deposit Scheme (TDS).

Custodial schemes hold the tenant’s deposit with an independent protection provider for the duration of the tenancy. Insured schemes allow landlords or letting agents to keep the deposit themselves, backed by insurance through an approved protection provider.

Under the proposed reforms, letting agents and landlords would no longer be permitted to hold tenants’ deposits in their own bank accounts, with all deposits instead required to be held in custodial tenancy deposit protection schemes.

Structure of system makes it easy for greedy landlords

Generation Rent has welcomed the government’s potential changes to abolish insurance-backed schemes and claims the current system is unfair to tenants.

Writing in the Big Issue, Dan Wilson Craw, deputy chief executive of Generation Rent, said: “The structure of the protection system makes it easier for greedy landlords and letting agents to cling on to as much of their tenant’s money as they can.

“Landlords can choose to either lodge the deposit money with the scheme itself for free (known as the custodial system) or pay a fee to insure the cash while holding on to it themselves (the insurance-backed system). All three schemes offer this choice.

“Some insurance schemes set a time limit for tenants to request their deposit back at the end of the tenancy, and also don’t require landlords to pay undisputed money to the tenant while a dispute is being adjudicated.

“This gives landlords leverage to make unreasonable deductions and encourage renters to settle so they can get back at least some of their money sooner. Of course, for many of us, having just moved home, getting out of our overdraft is paramount, so we can be bounced into giving up some of our money as long as we get enough of it returned quickly.

“In extreme cases, landlords can drag their feet so much that once the deadline has passed, it’s too late to raise a formal dispute, and the landlord pockets it all.”

He added: “Last year we recommended a range of measures that would encourage renters to challenge unfair deposit claims and reunite them with their money more quickly after moving out, including the abolition of insurance-backed schemes.

“The government has listened and is now carrying out a reprocurement process for deposit protection, proposing a single provider and only the custodial system of protection.

“Letting agents are not happy about losing their insurance option, and until the tender is finalised, it’s not a done deal. While the details are being worked out, we want the government to spell out to bidders that delayed return of deposits is unacceptable.

“It should be the landlord’s responsibility, not the tenant’s, to make a claim on the deposit if they have the grounds, and to do this within two weeks of the tenancy’s end, or the scheme returns the cash to the tenant.”

Unhelpful nonsense

However, chief executive of the NRLA, Ben Beadle slammed Generation Rent’s comments and said most tenants gain back their deposit.

He said on X, formerly Twitter: “Unhelpful nonsense on landlords holding deposits ‘hostage’, but there is certainly an opportunity to reform the deposit system, which has worked well since its introduction 19 years ago, and I’d support this, having been involved in the scheme’s roll out from 2008.

“But there’s nothing dodgy about the insured scheme. For many tenants, they will get their money back far quicker than through the custodial scheme and undisputed deposits are already required to be returned within 10 days of agreement, but there is certainly an opportunity to speed timeframes up.

“Most ‘greedy landlords’ value their time and sanity rather than arguing the toss over a few quid in a deposit. That’s if they bother taking one at all. Which is why some sensible reforms would be welcome.”

He added: “If I were radical, I’d scrap the current way of thinking and have deposits tenant led. Tenant selects the scheme and lodges the money, tells the landlord, landlord makes a claim if they need to within 10 days of tenancy ending , or it goes back to the tenant. Job done.”