Controversial proposals to allow tenants to ‘passport’ their deposits are back on the political agenda.
Housing Secretary James Brokenshire issued a call for proposals at the Chartered Institute of Housing conference yesterday, to make it easier for renters to transfer deposits directly between landlords when moving from one property to the next.
He said: “More than 4m people live in the private rented sector, yet when moving home, some tenants can find it a struggle to provide a second deposit to their new landlord – risking falling into debt or becoming trapped in their current home.
“Ministers are inviting proposals to make it easier for renters to transfer deposits directly between landlords when moving from one property to the next.
“Freeing up deposits and allowing a renter’s hard-earned cash to follow them from property to property – as they move to take that perfect job, to move nearer to family, or find a place that suits their changing needs – will create a fairer housing market that works for all.”
The idea would aim to save tenants up-front cost when moving into a rental property, while still allowing landlords to deduct payments for any damage.
This proposal had already been floated by London Mayor Sadiq Khan and was suggested by the Residential Landlords Association as part of its response to the Tenant Fees Bill.
However, critics say that if a deposit is passported too early, it will make it impossible for an earlier rental dispute to be resolved, and could leave a previous landlord out of pocket.
The National Landlords Association said passporting has potential, but cannot be made compulsory.
Chris Norris, director of policy and practice at the NLA, said: “We must make sure that adequate thought is given to the needs of both tenants and landlords.
“Everyone agrees that moving between tenancies should be made easier and cheaper, but we also need to recognise why landlords take deposits. A deposit protects against damage or default, so landlords must be confident their costs are covered before releasing the tenants’ money.”
ARLA Propertymark said it was supportive as long as it was practical.
David Cox, chief executive of the trade body said: “We’ve been sitting on Ministry of Housing, Communities and Local Government Tenancy Deposit Protection Working Group for the past 12 months, looking at the problem and finding answers.
“Significant progress has been made, and we think we’re close to a practical, implementable solution, but we’re not quite there yet.
“For deposit passporting to work we need to ensure that both the outgoing landlord’s deposit can be used if needed, while the incoming landlord has certainty they will get the full deposit they have agreed by the tenant.
“Affordability for tenants of any bridging loan or insurance policy will be key if deposit passporting is going to be a workable and affordable solution for the future of deposits.”
Meanwhile, the Government has published a consultation on tenancy deposit reform.