New ‘lifetime’ deposits plan for renters

Private renters are to be offered access to a new “lifetime deposit” to help with the costs of moving home.

The new initiative was announced yesterday in the Queen’s speech, among a raft of measures to reform the renting sector.

On average, renters have to put down a £1,054 deposit to secure a tenancy, according to the Office for National Statistics.

The government has finally pledged to publish the Renter Reform White Paper later this year.

The Conservative Party initially vowed to introduce a new scheme to permit tenants to transfer their tenancy deposits when they move properties in 2019 – ahead of the last general election.

The new Lifetime Deposit scheme will allow renters to transfer their deposit from one property to another instead of being left out of pocket for weeks while they wait to be reimbursed from their old landlord but have to spend money securing their new property.

Polly Neate, chief executive of Shelter, said: “The Queen’s Speech offers fresh hope to England’s 20 million private and social renters. Today, we are one step closer to ensuring every renter can have a decent place to call home.”

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4 Comments

  1. GeorgeHammond78

    Two unintended consequences of this will be:

    1. It won’t work in practice because of the timing involved in assessing deductions.

    2. It’ll drive agents into deposit replacement schemes which end up costing the tenant way more than finding the cash up front

    So, far from offering ‘renters fresh hope’, it’ll simply stick tenants with a bigger bill….

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  2. KByfield04

    As with all of this- the detail will decide if this is good or bad. In principle, this is a great idea- the average deposit deduct is around £150- just 10% of the typical deposit. As long as time frames are managed and there is some form of protection that ensures a deposit is ‘topped up’ should deductions be made or a new tenancy requires a larger amount. If done right, this could be a huge threat to the growing NDO (No Deposit Option) marketplace as ‘double deposits’ is the key driver here. Time will tell.

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    1. DG

      I don’t think we can take an average of 10% of deposit is used for dilaps; from experience (over 20 years) properties in general are either left good or bad, so if we work on averages there’s no need to take a deposit for 9 out of 10 tenancies, but which tenancies? The one’s that are good of course, but how can you tell at the outset you cry, you can’t. Therefore a deposit needs to be taken for each one. So you have a bad tenant, now you know that they keep the property in a terrible condition, but he-ho the deposit will cover it, not if it gets transferred to the new property it wont. So what’s to be done, well we could refuse a reference of course, but that means the new landlord won’t accept the tenant so they can’t move, they then get upset with the current landlord and treat the house even worse.  The landlord won’t be able to evict them because S21 has been abolished.  The tenants pay their rent on time and the neighbours don’t complain so no S8 either. Hmmm, stalemate. Ooh I know the landlord attempts to sell the property, ahh but the tenant refuses access, now what, the landlord offers a rent reduction if the tenant allows access, all good; the tenant agrees and viewings commence; the place is a tip and the price is driven down further by the mess of the garden, never mind, the landlord just wants shot of the place so accepts a very low offer. The tenants refuse to leave, the landlord goes to court using the new version of the S21 which states that you may only get your property back if you are selling it to a first time buyer or an investment buyer at a price which is a minimum of 20% below market value.  One year later the tenants have been removed by the bailiffs and the property completes its sale.  Oh dear, where are the tenants, no landlord will rent to them as they cannot get a reference from the previous landlord and they have been evicted, oh look there they are, four of them in a one bedroom bedsit waiting on the social housing list.  Transferable deposits; you may want to think quite hard before approving this. Deposits are taken because no one has a crystal ball.

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      1. paulgbar666

        In such circumstances many recalcitrant tenants will find MIB removing them in the dead of night having signed a Deed of Surrender.

        Such tenants won’t have any choice in signing unless they don’t wish to be able to use their hands properly.

        Criminal rent defaulting tenants will not be allowed to devastate LL financial circumstances.

         

         

         

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