Rental deposits to be capped at one month’s rent

by Property 118

3 months ago

Rental deposits to be capped at one month’s rent

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Rental deposits to be capped at one month’s rent

Responding to the announcement in the Queen’s Speech to cap tenancy deposits to no more than one month’s rent, Richard Lambert, CEO at the National Landlords Association (NLA) said:

“The decision to cap tenancy deposits at no more than one month’s rent smacks of a political gesture from a government desperate to court the voters who supported their opponents at the last general election.

“We estimate that around 40% of deposits exceed one month’s rent. Whilst capping them may reduce the move-in costs for some, it will increase the temptation for others to view the deposit as the last month’s rent, leaving landlords out of pocket at the end of the tenancy if, for example, the property has been damaged.

“Some landlords use a higher deposit to give them the extra confidence they need when letting to higher risk tenants, so this could also have the unintended consequence of deterring them from offering their property to those likely to be struggling with affordability in the first place”.

Comments

Gary Dully

3 months ago

Okay then if this is to be the rule, then we should push that mandatory ground 8 for serious rent arrears should also be reduced to 2 weeks duration, after which the tenant gets a mandatory repossession order.

It would radically reduce the number and amount of bad payers and emphasise that paying lawfully due rent is paramount.

Mick Roberts

3 months ago

Exactly. Why should we be allowed to charge more to higher risk people?
Does everyone get the same interest rate when going for a loan? No, the higher risk people have to pay more.

So I get my houses smashed up, with peanuts as security from the tenant.

Puzzler

3 months ago

Here's a thought - charge a higher rent for the first six months, allowing a higher deposit to be taken, then offer a discount or no annual increase in rent for a specified period. Might reduce the number of applicants though.

stuart jewson

3 months ago

will this be enforced retrospectively?

Dr Rosalind Beck

3 months ago

I had a Portuguese potential tenant accuse me of discrimination recently when I asked if she would have a job in place when she moved to my area. She said she wouldn't but that her parents have money (and how would I get hold of it in case of default if they live in Portugal? Uh, I wouldn't, so their financial status us irrelevant). Apparently, this does count as discrimination in Ireland. So over there they just have to take unemployed tenants' word for it that they can afford the rent and will pay it. I ignored the Portuguese woman - not worth getting into a spat.

Neil Patterson

3 months ago

Hi Stuart,

No mention of that and I can't see it being practical or happening, but fingers crossed.

Mike D

3 months ago

i'm sure there will be a 'new' common opportunity to shore up the greater risks of weak deposits, after all, a months rent is only a weeks tradesman wages, and we all know what amount of damage could be done .....into the thousands!!

Ian Cognito

3 months ago

Reply to the comment left by "Dr Rosalind Beck" at "23/06/2017 - 09:24":

Yesterday I attended an RLA run "Principles of Letting" course. I learned that advertising "No DSS/DWP" is illegal as it can exclude the disabled who, as a consequence, are receiving benefits.

I also learned that a legal way around this is to advertise for "professional tenants only".

Is this yet another grey area?

Ian

Cautious Landlord

3 months ago

More meddling spun as helping the vulnerable but will of course punish them the most. Letting fees will be going on the rent - it's obvious. If you can't do that in your area then you might sell up. Thus reducing supply and pushing up rents. Now deposits restricted....

Deposits are a way of mitigating risk which then influences the decision to let and rent charged. Take away that ability and rents must increase to compensate and/or measures such as charging 6 weeks rent in advance, making tenants take out insurance to cover their damage, tenants having to take out rent gtee insurance and so on will all be used to 'get around' this as well as taking the maximum deposit allowed (which with rents set to go through the roof will end up more than the standard 6 weeks now !)

Using another 'posters' terminology with 'less skin in the game' then human nature is such that the average tenant will take less care. That has to be compensated for.

The most vulnerable tenants who might have been happy to pay a higher deposit to facilitate the letting won't be able to do this, they most likely will fail the rent gtee insurance tests and probably the tenants ins cover as well. Off to the dangerous slums run as social housing - form an orderly queue.

Muppetry in the extreme, AGAIN, by the economically illiterate faux Tories.

If only we were a few years down the line I'd happily sell up and watch smugly as the local authorities/govt struggle with the impending s#it storm they have brought on themselves.

Ian Cognito

3 months ago

Landlords who let to tenants-with-pets and charge a much greater deposit will need to rethink things.

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