The deposit system for renters is “broken” according to a new report from consumer champions Which?, as it puts unnecessary financial pressure on tenants.
The deposit system for renters is “broken” according to a new report from consumer champions Which?, as it puts unnecessary financial pressure on tenants.
The report found that tenants are having to wait a significant amount of time before their deposit is returned, making it difficult to place a deposit on a new property. It found that one in six people who had moved out of a rental property in the last two years had to wait at least four weeks before getting the deposit back, with a third having to pay a new deposit when they had not yet got their last deposit back.
This situation is pushing tenants into debt, with two in five (43%) admitting they had had to borrow money through a credit card, overdraft, loan or via family or friends to help with moving costs.
Deposit deductions
Which’s report also found problems with the way that deductions from deposits are handled.
The two most common reasons for a deduction were cleaning (50%) and damage to the property (32%). However eight in ten (81%) of tenants who faced a cleaning deduction and three quarters (75%) of those who faced a property damage deduction thought this was unreasonable.
Incredibly, one in ten respondents said the landlord or agent had not given any reason why a deduction was being made.
Protect tenants
Which? Called on the government to review the deposit adjudication schemes to ensure they are working in the best interests of tenants, after just a third of respondents who had raised a dispute said they were satisfied with the process.
The consumer champion outlined a series of recommendations which it said would improve the “broken” system of deposits that tenants currently have to deal with. They include:
- Making all landlords register with local authorities, with information logged on a publicly available database and linked to the existing register of rogue landlords and agents established in April 2018.
- The creation of an independent regulator for lettings and management agents with a mandatory, legally binding code of practice and strong penalties for rogue operators.
- The launch of a review of tenancy agreements used by letting agents to establish how widespread use of unfair, inaccurate or misleading terms and conditions is and if further action, for example an investigation by the Competition and Markets Authority, is required.
Alex Neill, managing director of home products and services, said that the number of people falling into debt in order to cover the cost of a new deposit was a concern, particularly given the lengthy waits to get old deposits back and the potential for facing unreasonable deductions.
He added: “The findings highlight how the deposit system is crying out for reform so that it is fit for purpose for the record numbers of people who are living in rented accommodation. We believe that the Government must tackle the issues that we have identified in our report head on to ensure that the rental market delivers for consumers.”
