Renters across England have made an average saving of £163.08 since tenancy security deposits were capped last year at the equivalent of five-weeks’ rent for assured-shorthold tenancies with an annual rent of up to £50,000, or six-weeks’ rent for tenancies with an annual rent of £50,000 or more.
According to the Tenancy Deposit Scheme (TDS), deposits have typically fallen from 5.5 weeks rent in April to 4.76 weeks in December 2019, with the average renter saving 11.35% or £163.08.
In London, the saving is even greater with rental deposits dropping by an average of £300.96.
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This is not a saving, simply a reduction in the potential remedy available to a landlord if the property is not returned in good order. Indeed market forces will dictate that rents will rise to cover such shortfalls which will place an extra burden on responsible tenants whilst letting the feckless and reckless off with a further £163 that should rightly belong to the landlord. Shelter shafting decent tenants yet again!
But have they saved £163 ? No they have not, the lost deposit has simply been added to the rent, that none of them will get back, shot in foot again.
Andrew Townshend - Better headlines for the folks that pushed for these cuts. Afterall, Renters save an average of £163 on deposits BUT lose an average of £300 (if monthly rent was subsequently increased by £25 per month). Doesn't sound so good. Having said that, some agents were ripping tenants off with their admin fees and deposits. My son rented a house with 5 people - one tenancy agreement (ok credit checks guarantors need to be paid for etc) but really the admin fee was over £800. Realistically it was not 5 times the work of producing a AST for 1 person (I'm in the business - I do know), it was one AST with 5 names on, 1 inventory, and wow they had to deal with 5 people collecting keys on different days - Was that really £800+ amount of work . And a deposit of 2 months per person (around £5K) that's uneccessary. Shame how a few couldn't control their greed. With 3 kids at university, I have thousand tied up in deposits (often having to be handed over 8 months before the tenancy even starts!!) Some things do need to change. Looking forward to when the legislation stops collecting deposits 8 to 12 month in advance.
S S, I agree some agents were ripping tenants off with high fees, what might have been better here would have been a cap on fees that could have been charged to the tenant. however we are talking about damage deposits here which at a max of 5 wks are not enough so the money has to be collected another way as much as that is unfair to good tenants but the government made the rules here not us landlords.
Robert Brown, Andrew Townshend and S S - totally agree.
I appreciate that the majority of good tenants receive back their full deposit, so limiting the period is OK. However a significant number of tenants who cause £1000s of damage, £1000s of unpaid rent and usually both damage and unpaid rent. So reducing the maximum deposit opens landlords to excessive risk.
By the tenancy deposit schemes publishing such one-sided headlines, suggests that the deposit is held to protect tenants from unscrupulous landlords. Whilst it is laudable to protect tenants in this way, the obverse needs to be true. ie Landlords require the deposit to be secured to protect the landlords from unscrupulous tenants. To balance the published information...
Could the deposit holding schemes also publish:
. details of damage claims, especially those in excess of the lodged deposit
. details of unpaid rent, especially those in excess of the lodged deposit
. details of cases that go to court and nunber of CCJs awarded
. details of landlords proscuted for various infringements
The above totals could be presented as a histogram
x-axis - ranges of rent arrears
x-axis - ranges of damage
y- axis number of tenancies
These histograms could be segregated by postcode districts and different years of when the tenancy ends.
Show heatmaps.
Monthly UK rents rose by about £40pcm last year alone. That's £480 a year they will never see again versus £163 they may well have got back. I dont see that many tenants will be celebrating the £163.08 "saving" as a result of government interference, albeit I dont think many of them have worked out what its costing them yet. When they do, you never know we may get a tenant campaign to have fees re introduced.
U lot say everything I was gonna say. These people at the top have no clue with reality. These deposits if no damage they was getting back. Along side all the other attacks on landlords (which impacts on tenants), this measure has just resulted in increased rents which tenant don't get back. All vote winning, we helping u tenants cry the Govt. When we know, more landlords now sold, supply and demand, rents shooting up for remaining landlords.
Interested Mick are you intending to get out of HB lettings which I appreciate has been your major business over the years?
Have all these circumstances caused you to reconsider your business model to potentially have fewer properties in better areas where tenants can qualify for RGI?
Personally I refuse to have anything to do with HB tenants and will be selling all my properties to potentially have a 4 bed residential property where I will take on lodgers.
Far less risky and about the same net return as from 4 rental properties.
Easy to get rid of lodgers if they DON'T pay rent.
You have over the years provided an effective and worthwhile service to HB claimants in Nottingham.
Has the actions of the Council along with all the other threats coming changed your business perspective to stop doing business with lower quality tenants!
For me a flight to quality is the only way to remain viable.
RGI is the principal protective measure to prevent losses for LL which means quality tenants are needed.
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