The government has provided clarification on deposit cap requirements following the end of the transition period on 31 May.
For tenancies in England, the Tenant Fees Act came into force on 1 June 2019, making it illegal for landlords and letting agents to charge certain fees in connection with a tenancy.
A key part of the legislation was the capping of tenancy security deposits 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.
To help landlords and letting agents check their compliance with the cap, The DPS has produced a simple flowchart - see below - guide to help landlords and letting agents understand whether they need to lower their tenancy deposit amounts.
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Surely recent events have shown the folly of low deposits? If tenants could start with 2 months deposit down and pay an extra 10% rent towards an increased deposit, then they would have three months deposit after 10 months renting and 4.5 months deposit after 2 years renting. That way tenants would be much better placed to weather any unexpected drop in future income, build up a useful nest egg and demonstrate fiscal responsibility to landlords. At the moment, everyone is relying on the fiscal responsibility of the landlords to avoid early repossession by lenders. It's time for a level playing field!
Seems over complicated. Its very simple. If stat periodic before 1 June 2019, no action required. If not, deposit needs to be 5 weeks.
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