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Deposits cap could lead to more disputes, inventory clerks warn

A leading trade body says a cap on damage deposits paid by tenants - as proposed by the government - could lead to an increase in formal deposit disputes.

The cap was contained in the provisions of the Tenants’ Fee Bill, unveiled on the same day as the Queen’s Speech back in June. It made general reference to a cap on both holding and security deposits, as well as the high-profile pledge to ban letting agents’ and landlords’ fees levied directly on tenants.

It has been proposed that holding deposits are capped at no more than one week's rent and security deposits at no more than one month's rent – down from the current level of two months.

Now the Association of Independent Inventory Clerks, which has almost 1,000 members nationwide, says that while a cap on deposits will help tenants when they first rent, the lower sums required could lead to an increase in the number of formal deposit disputes. 

These disputes occur when tenants and landlords cannot agree over proposed deductions taken from the damage deposit at the end of a tenancy.

"A cap on security and holding deposits is certainly more positive than an outright ban as has been proposed for up-front letting agent fees charged to tenants" says Danny Zane, joint chair of the AIIC.

"However, we are concerned that as tenants will be committing less money to cover damages at the start of a tenancy, they may take a more laissez faire approach to the rental property, and landlords could therefore be left with more damage and repairs to deal with."

Zane warns that in such cases, landlords are more likely to make deductions from tenants' deposits which - if challenged by the renters - could lead to a formal deposit dispute.

"We hope the lower sums involved don't encourage renters to take less care of their rental properties. This government initiative could, in some cases, have unintended consequences" adds Emma Glencross, the association’s other joint chair. 

Regardless of the proposed cap, the AIIC stresses that an independently compiled inventory is an integral part of the rental process which can significantly reduce the chances of a deposit dispute between tenants and landlords.

“An impartial, professional inventory comprehensively details the condition and contents of the property at the start and end of the tenancy,” explains Zane, who is also managing director of My Property Inventories.

“They help to protect tenants from unfair charges and can also stop landlords being left out of pocket.”

He says that in the event there is a formal deposit dispute, it’s widely considered that the three deposit protection schemes will look more favourably on check-in and check-out reports that have been produced both professionally and independently.

A full draft of the Tenants' Fees Bill is expected to be published later this year with legislation being introduced at some point in 2018.

  • Peter Hendry

    It's complete nonsense to even have a cap at as little as two months rent when the same amount of clear notice is legally required to be given by the landlord.
    The tenant will often stop paying rent at that point anyway, resulting in the landlord have no deposit at all to use to cover the cost of any damage chargeable to the vacating tenant.
    Wouldn't four months rent be more equitableas rule of thumb for a deposit when taking an Assurred Shorthold tenancy?

  • icon

    This is getting silly. I have just started clearing up after a vacation. I once had a nice clean flat fit for any normal people. I really don't care about a few years wear and tare. That is quickly sorted and I would not touch their deposit for that. Now the place is beyond filthy. There is five years filth spread everywhere. The kitchen is thick with grease. There is mould where bags of clothes have been stacked against exterior walls. All carpets will need a heavy duty clean. They stink. A drop blind has been cut off its header and thrown away. Good curtains and rails have been taken down and replaced with absolute trash. There are holes in the plasterboard where the new rails have pulled out. The cooker ceramic top is in a ghastly mess. And there is more.

    I am going to need to pay out circa £3,500 and loose rent as well.

    These people simply do not know how to live in an English house and I am having to put up with the consequences. If tenants will have all these new proposed rights given to them then I think that landlords should be able to interview tenants and actively reject people who fail that interview. It is not discrimination. It is a commercial business and obvious risks need to be avoided. I have been is spotless households belonging to similar people to my late tenants. Can not say any more can I?


    Peter Hendry

    I agree.
    Damage and rent loss deposits should be kept at sufficient levels.
    Even if the overall amount held totals a significant sum economically. That is no reason to reduce them.
    For those tenants who cannot save enough for that, they should obtain a tenancy surety so that the landlord has recourse if they do not reasonably look after the property they are renting.

    I have had a very similar experience to yours just recently where I am having to spend most of the last eight years rental income on re-building the interior.

    For as long as large numbers of people need to be housed in privately rented accommodation because there is insufficient Housing Association property available, and private landlords step in to provide this service, they need legal and financial protection. If that should be taken away, the lack of incentive for private landlords to keep providing safe clean and habitable accommodation could result in no suitable property being available to rent in England and Wales for significant numbers of families.

     
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