Rental deposit cap could lead to more disputes, says trade body

Rental deposit cap could lead to more disputes, says trade body

The Government's plans to introduce a cap on damage deposits paid by tenants could lead to an increase in formal deposit disputes, according to regulatory trade body the Association of Independent Inventory Clerks.

As part of the Queen's Speech earlier this summer, the Government unveiled its draft Tenants' Fee Bill, which included details of the impending ban on letting agent fees charged to tenants as well as the first mention of a cap on holding deposits and security deposits.

It has been proposed that holding deposits are capped at no more than one week's rent and security deposits at no more than one month's rent – down from the current level of two months.

The National Landlords Association estimates that approximately 40% of current security deposits exceed the proposed one month rent cap.

A full draft of the Tenants' Fees Bill is expected to be published later in 2017, with legislation being introduced at some point the following year.

The AIIC says that while a cap on deposits will help tenants during the initial stages of a rental, the lower sums required could lead to an increase in the number of formal deposit disputes.

Danny Zane, Joint Chair of the AIIC, said: "We are concerned that as tenants will be committing less money to cover damages at the start of a tenancy, they may take a more laissez faire approach to the rental property, and landlords could therefore be left with more damage and repairs to deal with."

In this scenario, landlords are more likely to make deductions from tenants' deposits which, if challenged by the renters, could lead to a formal deposit dispute.

Some landlords currently ask for higher deposits for their own peace of mind, to cover high ticket furniture items or allow pets.

As other industry bodies have already explained, a cap on deposits will stop them being able to do so and could therefore discourage landlords from letting or adversely affect the standard of private rental properties.

Regardless of the proposed cap, the AIIC stresses that an independently compiled inventory is an integral part of the rental process which can significantly reduce the chances of a deposit dispute between tenants and landlords.

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Latest Comments

Kelvin Lloyd
Kelvin Lloyd 09 Oct 2017

IT is up, to the Planners. If they will only give permission for bungalows on certain (suitable) sites, they will be built.

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maggie swift
maggie swift 09 Oct 2017

It's just the beginning of the shocking rise.

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maggie swift
maggie swift 09 Oct 2017

I have recently read that the bungalows can provide social housing for elderly residents in London.

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zoe glover
zoe glover 05 Oct 2017

Update! Worst company I have ever dealt with. Undervalued a Cambridge property by over 100k, wont take on any evidence of valuation including a RICS valuation done 3 years ago for the very same value...

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Paul Edwards
Paul Edwards 27 Sep 2017

Its nonsense articles such as this that make it harder to get clients to realise just how difficult the market is out there. When you see Rightmove and there are more 'price reduced' then 'new' most days...

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Tom Allen
Tom Allen 20 Sep 2017

Absolutely agree with you!

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RyanGeo 18 Sep 2017

A sharp correction would be a less dramatic expression to use. That is already underway in certain sectors in Reading where I practice as Chartered Surveyor

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sean benton
sean benton 01 Sep 2017

Identity theft is a thread for any profession. So,people should stay alarmed. I once take help from a letting agent and came to know that letting agents are taking every precaution to prevent fraudulent...

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Mark N.
Mark N. 30 Aug 2017

We have seen a surge in instructions over August and that should continue into September too.

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Chris 30 Aug 2017

Unfortunately, all the legislation bears its force on Landlords and ignores, naively, the effect of Rogue Tenants on the ability of landlords to keep houses in repair and offer properties for rent at reasonable...

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Christian Donovan
Christian Donovan 18 Aug 2017

The write-down on house values, combined with the fall in the GBP saddled the fund?s property portfolio with a 1.4% loss in the second quarter. The shocking amount of $240 million.

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Samantha Goodman
Samantha Goodman 11 Aug 2017

Interesting point of view.

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