The Government has finally confirmed that it will extend a proposed cap on security deposits to six weeks’ rent instead of four after first announcing that they would introduce a cap along with a ban on charging tenants fees almost 12 months ago, in the Autumn Statement 2016.
Initially the cap on security deposits was to be set at no more than four weeks’ rent. However, the Government now proposes to extend the cap to six weeks’ rent after concerted lobbying from the NLA.
Chris Norris, Head of Policy at the National Landlords Association (NLA), said: “At the time the NLA argued that an arbitrary cap of four weeks’ rent would be damaging to certain groups of prospective tenants and could have the counter-productive effect of making it harder for some households to secure suitable accommodation in the sector.
Since the plans were announced we have been lobbying the Government and we met with the Minister of State for Housing and Planning, Alok Sharma MP, in September in order to press him to rethink his plans for a cap; taking into account the needs of those living and working in the private rented sector.
The NLA is happy that the Government has listened to the evidence we presented on behalf of our members. Whilst we remain disappointed that the Government continues to believe a cap is necessary, extending it to 6 weeks rent will reduce those households and landlords disadvantaged by the policy significantly.”
Ajay Jagota, founder of deposit free renting firm Dlighted and campaigner for privately rented property reform, responded: “Renting in Britain needs to change, but I’m not convinced this is the change it needs. By capping deposits at the industry standard of six weeks rent, all these ‘reforms’ actually do is protect the status quo. So what’s the point of them?
Deposits will still place a huge financial burden on renters at a time when wages are falling but inflation and debt are rising. This burden makes it harder to find and keep tenants, but ultimately does little to protect landlords against property damage and unpaid rent.
The fee ban is likely to place a major financial burden on letting agents too, which is likely to lead to higher rents and other costs for renters.
It’s clear that now is the time for landlords and agents to think about deposit free renting, even if the government has ducked the issue for now. Not only does deposit replacement insurance save letting agents time and money while better protecting landlords and finding tenants faster, it also allows them to differentiate themselves from the competition in a post fees-world.”