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Lifetime Deposits: Warning over complexity of government pledge

The government’s pledge to introduce a lifetime deposits concept, theoretically making it easier and cheaper for tenants to move, has been given only a guarded welcome by a consumer website, Money.

It says that tenants have seen costs increase significantly in the past year, by 10 per cent to an average of £821 pcm since before the pandemic, according to Halifax. 

This is compared to an increase of mortgage costs by an average one per cent to £753 for those who own their own homes.


On top of rising rents, one of the biggest problems facing renters is the size of the deposit they need to save in order to move. This is an average of £1,054, according to the Office for National Statistics, which has to be paid in advance before moving into a new home, and before the deposit from a previous property is released.

Therefore Money says a lifetime deposit concept appears popular, but it warns there may be problems with implementation. 

James Andrews, senior personal finance editor at the  website cautions: “At first glance, the new plan for tenants’ deposits to move with them from property to property looks like an all-out win - but the devil will be in the detail.

“The first point to make is that not all deposits are equal - which means there needs to be a simple way to add to the amount you have.

“The second is that not all moves are seamless - what happens when there’s a gap or, worse, an overlap between one rental contract ending and another beginning.



“And finally - while the tenancy deposit protection scheme means a landlord can’t withhold your money, it doesn’t mean they can’t make deductions for damage.

“If this is disputed, then that money is just as tied up as it would have been if you had to go out and find a new deposit for the next property as you do now.”

A government White Paper on the issue is scheduled for the autumn.

  • James B

    If they remove the value of a deposit every tenants is going to need a guarantor .. councils best ready themselves for waves of the poorer tenants who don’t know a homeowner

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    • JH
    • 13 May 2021 12:06 PM

    We rarely need to deduct from our tenants' deposits, but we still need to have the security of doing so when necessary. If a tenant moves from our property to a new one elsewhere they will get their deposit returned in around 7 days. Only a minority of tenants can not find the £700-1000 necessary to cover this transition. Is a lifetime deposit really the solution? It is super complex and won't work.
    Instead, how about a financial product that will make a short term loan to a tenant to "bridge" this brief period, with a small fee and a commercial interest rate. The overall cost to the tenant would be relatively low, and it would enhance the tenant's incentive to leave their old home in a proper state to ensure the bridging loan is paid off quickly. Tenants who plan to rent multiple times in their life would also benefit from a history of good credit performance.
    I am certain there are plenty of fintech companies who would provide cheapish bridging in return for the opportunities for cross-selling to home-movers.

  • Kristjan Byfield

    Average UK deposit deduction is around £150 per deposit- this is a worthy pursuit & solution if it can be easily facilitated. The easiest model I can see is the tenant paying a small insurance premium each time they move to cover the risk of a top-up (if applicable) not being received or substantial deductions made relating to a vacating property- with the 'missing' funds then not replaced. This just seems the cleanest & easier solution. So, for example, a one-off charge of £30 per deposit.
    However, where this gets more complex is when tenants sharing a property move with other people. How do you track what proportion of a deposit is whose; who is liable for deductions made at the end; etc. The eye will be in the detail but this is something that has been looked at in some detail for a while now.


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