Will transferring tenancy deposits simply shift the problem elsewhere?

Will transferring tenancy deposits simply shift the problem elsewhere?

According to property campaigner, Ajay Jagota, proposals to allow renters to transfer tenancy deposits between properties are to be welcomed – but will ultimately do little to improve the reality of renting.

Mr Jagota also posed the question: “If landlords and previous tenants end up in a lengthy deposit dispute, how can that money simultaneously be passed on to a new landlord?”

The Residential Landlords Association is one of several organisations to recently call for tenants to be able to transfer tenancy deposits from one rented property to another.

The membership body’s proposals would see tenants able to top up or claim some of the deposit back, depending on the cost of the tenancy deposit on a new home.

London Mayor Sadiq Khan’s recently published Housing Strategy also states that the Mayor’s Office intends to work on the “passporting” of tenancies to allow deposits to be transferred when a tenant moves home rather than having to pay a new one before an existing amount is returned.

The National Landlords Association – a partner of deposit protection scheme mydeposits - has also put forward the idea that the forthcoming draft Tenants’ Fees Bill should include provision for the passporting of undisputed deposits between tenancies.

Ajay Jagota is founder of deposit replacement insurance solution Dlighted. The deposit free renting system gives landlords a rent guarantee, £600,000 of protection from property damage and free legal assistance.

Ajay said: “This is not a bad idea, it’s just not a very good one. For starters, it only works when deposits aren’t contested. If landlords and previous tenants end up in a lengthy deposit dispute, how can that money simultaneously be passed on to a new landlord? So the system doesn’t work when it’s needed most.

After 10 years even the tenancy deposit establishment are finally admitting that the DPS system simply doesn’t work, but are still only proposing to fiddle around the edges of a system in need of comprehensive reform – and even the miniscule improvements they are proposing don’t seem to have been fully though through.

Transferable tenant deposits would in all likelihood make life easier for some people, but ultimately they would do little to tackle the fundamental problems inherent in the tenancy deposit system.

From a tenant’s perspective it might make it easier to move from property to property, but it does absolutely nothing to make renting more affordable in the first place – and it still deprives average renters of more than £1000, which many simply cannot afford, leaving some little choice but to settle for inadequate properties from inadequate landlords.

Zero deposit systems like Dlighted don’t just save them that expense altogether, our unique Trusted Tenant scheme also makes it easier for them to move from rented property to rented property by showcasing their track record and reliability as a renter.

From a landlord’s perspective a traditional tenancy deposit simply doesn’t offer adequate protection against rent arrears or property damage, and hardly gives any help with any of the inevitable costs of renting out a property, from specialist cleaning to legal fees.

Our system also saves landlords and letting agents the time and money of collecting and administrating deposits, and removes the need for any kind of deposit dispute process.

And from the government’s perspective it does nothing to get the billions currently sitting in deposit accounts into the wider economy or prevent the pervasive theft from deposit accounts by crooked landlords and letting agents.

There’s nothing wrong with passporting per se, it’s just when it comes to issues like affordability in housing and conditions in the private rented sector it just passports problems elsewhere. If we all agree that deposits don’t work, let’s ditch them altogether.”

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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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