The Deposit Protection Service has revealed that more than four out of ten of the tenancy deposits it manages are currently higher than the new tenancy deposit cap.
Since June 1, most new assured shorthold tenancy deposits in England are capped at five weeks’ rent where the total annual rent is less than £50,000, or at six weeks when the yearly rent is £50,000 or more.
Although landlords and their agents are not compelled to apply the cap to tenancies that began before the deadline, they must adjust the deposit that exceeds the cap whenever an existing tenancy is renewed on a fixed-term basis.
The DPS has said that 42.81% of the deposits it currently protects stand above the cap.
Matt Trevett, managing director at The DPS, said: “Our figures show that the tenancy deposit cap will eventually affect a significant proportion of properties around the country.
“Landlords and letting agents should be ready to make the change whenever a relevant tenancy ends in order to fully comply with the law.”
Since June 1, the proportion of deposits protected by the DPS that exceeded the cap has decreased by 1.46% from 44.27%.
The DPS says this reflects the start of new tenancies with compliant deposits plus landlords choosing to adjust proactively larger deposits for existing tenancies.
The DPS said that if landlords want to reduce existing deposits now rather than wait until tenancies end, they can do so using its Deposit Cap Calculator, available at:
http://www.depositprotection.com/media/1564/deposit_cap-calculator_2019.xlsx
yet more admin and cost to do – for what? pointless. Much better to have said 5x weeks deposits for all new lettings after 1 June which then would have been easy to admin.
Renewals are not classed as new deposits for deposit registration so why should the 5x week apply to renewals. no sense.
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Utterly agree with seenitall, why? We have a number of tenancies where there was good reason to take a larger deposit such as families with dogs or those moving back to the UK with no recent credit history. Now we have a number of landlords being left in a vulnerable position that they wouldn’t have put themselves in had they been faced with the same situation in the first instance , a ticking time bomb towards notice before we have to reduce deposits down to a dangerously low level. Next issue of course will be those tenants trying to find their next property as landlords become more risk adverse with the looming legislation such as abolishment of S21 along with low deposits.
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Totally agree. I’ve got angry landlords that employed us in part, due to the taking of a month and half deposit, in addition to a pet deposit that are now asking who’s going to pay to have all the carpets cleaned – this isn’t what I signed up for? They’re wary of pets for new tenants even when the tenant themself is almost begging us to take a pet deposit rather than a small increase in rent – which is nigh on unmanageable anyway. And we’re giving a weeks rent back (well the DPS are) to tenants who have rent arrears. All these changes are based upon the absolute certainty that all tenants are good and all landlords are rich. Once you start to entertain the idea that this isn’t actually the case – then the fact that it’s bonkers is blatantly obvious
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Bonkers is the word!
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The legislation says that tenants can use any excess to mitigate their rent arrears.
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But the DPS cannot say if or how many of the 42.81 % have been renewed, so can’t necessarily quantify a problem – so if they don’t have facts, why make up a story – unless its for publicity ?
Only victims are , you guessed – Landlords.
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