The average deposit costs renters around £1,110. And this sum is often doubled due to delays while tenants try to get their previous deposit back. This leaves a third of renters having to pay a new deposit before they had received their previous one. According to Which? this means almost half of renters having to take out loans to cover the cost of their deposit when moving home. The consumer champion found that 43% of tenants planning to move to a new rental property had to use a credit card, loan, overdraft, or borrow cash from friends and family to pay for the deposit on their new home. The government now accepts that tenancy deposits are a problem and recently published a call for evidence.
More than £4bn of public money is locked up in deposits across England and Wales. So property pundits are now calling on the government to embrace tech solutions to help solve the problem. Ideas for change include:
- Tax incentives to landlords who opt for alternative deposit solutions
- A central clearing system to manage all tenancy agreement transactions
- An independent adjudicator to settle disputes between landlords and tenants
Ringley has been looking after landlords and their tenants for more than 25 years and created a proptech solution – PlanetRent – because of the cumbersome nature of the tenancy process and tenancy compliance. We know it is hard for tenants to find their deposits and it is equally hard for landlords to ensure their properties don’t suffer damage beyond ‘fair wear and tear’. PlanetRent offers landlords the option to embrace deposit-free renting so tenants can opt to pay the equivalent of one week’s rent (as a deposit alternative) and the landlord gets eight weeks’ rent cover.
What we would like to see the government set up, is an easily searchable database of troublesome people, ie those who have LOST previous deposit adjudication. We support the call for a single independent adjudicator to preside over disputes between landlords and tenants. Letting agents are already burdened with significant legislative compliance including Ombudsman membership and Deposit Scheme membership – so this would really bring private landlords into line with what agents already have to do.
It would be great for the government to offer tax incentives to landlords who opt for deposit alternatives. But the challenge here is to satisfy the ‘perfect tenant’ who will be guaranteed to lose one week’s rent buying a deposit alternative, but as a perfect tenant would expect to get their deposit back in full.
And finally, our view on a single clearing system to manage all tenancy transactions is that this is probably a method to tax any rental income that is undeclared by some landlords!