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.
https://www.gov.uk/government/consultations/tenancy-deposit-reform-a-call-for-evidence
Comments (11)
Can never work where there is a claim by the first landlord.
“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.”
Oh yeah! Take a £1000 deposit. Magically it can be used to pay an unspecified sum in damages (up to and including £1000) to the current landlord and simultaneously it must be available to give “certainty” to the new landlord. The sentence quoted above is grammatically a sentence but it is pure gibberish.
A work around, not a genuine solution.
Realistically, a fair proportion of tenants won’t pay their last month’s rent – so the amount to be returned – assuming the property is left in acceptable condition is one weeks’ rent. That’s not life changing money either way! The application fee has gone – so that’s money in the bank. Why do they keep trying mend things that aren’t broken? They’ll have us contributing to the moving cost next.
I wish you hadn’t mentioned moving costs – I bet they introduce that if a landlord wants to tenant out to sell!!!!!
What a bunch of numpties.
Clueless.. just the latest generation rent vote winner to come out the London tenant think tank
there is a government consultation on tenancy deposit reform which has just been published
please respond, as it needs to be made simpler and remove the crazy situation where a genuine error can mean a multiple deposit penalty just because the tenancy has been renewed or become stat periodic.
Further proof that nobody in government has a clue about our business!
Why would a landlord release a deposit before the tenant has vacated his property, the property has been checked and dilapidation agreed? The only way would be for government to underwrite deposits and what a mess that would be!
One deposit scheme would be a good start JC
Better off now telling landlords it’s pot luck and if a tenant wrecks your property or doesn’t pay rent, the landlord should go for councilling to control their anger.
Poor tenants. God made them special.