Are Tenancy Deposits Redundant?
An investigation by the BBC has unearthed shocking findings concerning the misuse of tenants’ deposits.
BBC Inside Out (South West) reports that some landlords and lettings agents have been misappropriating tenants’ deposits. By holding the deposits in a private bank account, the sum is still available for landlords and agents to access at any time.
Landlords and agents are legally obliged to register deposits with a government-backed scheme, some of which are insurance-based. The deposit can then be held in a custodial account, or held directly by the landlord or agent.
Of course, the unscrupulous letting agents and landlords featured here are not representative of the majority, who willingly comply with the rules and respect their tenants. Nonetheless, at a time when tenancy deposits are approaching unaffordable heights, it’s time for a solution that’s fair to landlords and tenants alike.
A Warning Light for Tenants
In light of the BBC’s report, tenants may wish to use the findings to inform them better when it comes to the deposit for their next rental property. Before signing the dotted line, finding out how their deposit will be held may mean the difference between a swiftly returned deposit at the end of the tenancy and a long and arduous dispute.
Equally, researching the best deposit service for the landlord and letting agent to use in the interests of both parties will aid tenants when it comes to both the sum of deposit they need to pay, and the safety of that deposit through the duration of their tenancy.
Deposits Versus Affordability
Recent findings by Nested have found that a family living in London must earn a monthly average of £6,305.31 per month in order to meet rent and living costs, which equates to a salary of over £75,000 a year.
Further research conducted by The Deposit Protection Service found that properties with London postcodes are charging tenancy deposits that average £1,831.14. Whilst this deposit may be accessible for those on the £75,000 salary necessary to live in the capital, for those with income significantly below this level, such a high sum is enough to effectively price many tenants out of the market.
Though London is an extreme example, being the most expensive place to live in the UK, across the country tenancy deposits continue to exceed reasonable affordability. With an increasingly inaccessible housing market, more households are being forced to rent. And with real earnings stagnating whilst rents continue to rise in alignment with the rule of supply and demand, tenancy deposits can pose real financial problems, even without the kinds of abuses outlined in the BBC investigation.
Reposit is one company that is actively challenging this affordability issue, and giving protection to both landlords and tenants with its innovative model.
Rather than forking out an average of six weeks’ rent for their deposit, Reposit takes just one week’s rent as a non-refundable fee, whilst simultaneously assuring protection for landlords. Anything that goes against the covenants of the assured shorthold tenancy agreement is covered.
We only take a week’s rent from the tenant, the standard six week sum is covered for the landlord. In the event of a payout, Reposit also pays back any damages, unpaid rent and cleaning costs within a maximum of 28 days.
The Reposit service is also free for letting agents and landlords, and to tenants it simply costs one week’s rent.
Evolving The Lettings Market
With such reports of abuse, combined with news about continuing unaffordability, becoming so regular, it’s clearly time for an overhaul of the current system. Companies like Reposit, seeing the downfalls within the system, are stepping up to the plate and, thankfully, offering an alternative to improve how we deal with tenancy deposits from now on.
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