New Holding and Tenancy deposit rules and data clarified

by Property 118

A month ago

New Holding and Tenancy deposit rules and data clarified

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New Holding and Tenancy deposit rules and data clarified

The Government have written to a Conservative and Labour MP to clarify the rules and data regarding Holding deposits and Tenancy deposits post the Tenants Fees Bill.

Junior Housing Minister, Rishi Sunak, has confirmed the new position on taking these deposits in an open letter following questions raised at the first session of the Public Bill Committee.

The Letter states:

On Holding Deposits

I promised to confirm the timescales with regards to holding deposits. The Bill provides that landlords and tenants will usually have 15 days to enter into a tenancy agreement once a holding deposit has been paid. This is the deadline for agreement and during this period, landlords, agents and tenants should take all reasonable steps to enter into a tenancy agreement. Landlords and agents may agree a different deadline for agreement with the tenant in writing.

Landlords and agents must refund the holding deposit in full within 7 days of:

  • The landlord and tenant entering into a tenancy agreement before the deadline for agreement
  • The landlord choosing to withdraw from the proposed agreement
  • The deadline for agreement passing without a tenancy having been agreed

On Tenancy Deposits

I also promised to share the data with the Committee from Scotland, which strongly suggests that capping deposits will not lead to such a cap becoming the default.

In Scotland, the data shows that actual deposit rates are running at around £580 to £730, when the maximum allowed under the cap is, on average, £1286. This compares to a 2 bedroom average rent of £643 per month in Scotland in the year to September 2017, as published in the Private Sector Rent Statistics.



Comments

James Mann

A month ago

I do not know why this is called a holding deposit, when it is clearly not a deposit. It has caused all sorts of problems in court. This fee should be called a holding fee and is for the benefit of the landlord to discourage potential tenants from showing interest in multiple properties and wasting her time. I have always returned this by way of a offsetting it against the first months rent.

Michael Barnes

A month ago

Reply to the comment left by James Mann at 19/06/2018 - 13:54
It is a deposit because it is a surety against the tenant pulling out.

It is not a fee because it is refundable if the tenancy goes ahead.

Clint

A month ago

Reply to the comment left by Michael Barnes at 19/06/2018 - 18:03
I agree it is a holding deposit and most people refer to it as so.

Chris Daniel

A month ago

The Junior Housing Minister doesn’t seem to leave Any circumstances where the holding Deposit can be withheld by the Landlord.
Wouldn’t be bias and discrimination against Landlords by the govt, surely ?

Terence Joseph

A month ago

Can we have a cap on rent arrears as well please? 😉

John Frith

A month ago

Many prospective tenants have to give one months notice on their current rented property, and I would accept the holding deposit as a surety for that month. I would then get the new tenants to sign the new contract upon moving in, having paid the 1st month's rent plus the outstanding deposit in advance. This will no longer be allowed.
I will be forced to demand that the new contract be signed within 15 days of taking the holding deposit (probably less than half way through the notice period to their old landlord). And of course the the month's rent in advance and outstanding deposit will have to be paid before that!
So in order to protect the tenants from having to provide holding deposits (say equivalent to 2 weeks rent) for more than 15 days, lots of tenants will now have to provide 1 months rent + the remaining deposit 2+ weeks earlier!

Genius example of the law of unintended consequences, and of how over-regulation stifles the market.

Clint

A month ago

Reply to the comment left by John Frith at 20/06/2018 - 09:38
I believe the way round this is to have a written agreement as to how long the holding deposit can be held i.e. the landlord could state in the deposit receipt that the tenancy is due to start on a date a month ahead or any other date or have I missed something.

John Frith

A month ago

Reply to the comment left by Clint at 20/06/2018 - 09:45
Yes Clint, I stand corrected. I missed that it could be varied.
Can someone delete my previous comment!


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