The rise of transferable deposits?

The rise of transferable deposits?

Paying for a deposit is one of the most oft-cited impediments for renters. Getting together a lump sum – often in excess of £1,000 – on top of monthly rental payments and bills is impossible for many, restricting people’s ability to move.

One solution to this has been proposed by the Residential Landlords Association (RLA) which says tenants should be able to transfer an existing deposit between landlords when moving home rather than having to come up with a brand-new lump sum each time.

The current system means that tenants essentially need two deposits in order to live in the Private Rented Sector, something that is beyond the means of many.

This proposal follows the government’s call for evidence on the barriers faced by tenants, and ideas for what can be done to smooth the process and improve the rental market.

The full RLA recommendations are as follows:

The introduction of a tenancy deposit trust scheme:

The scheme would see an account would be created and maintained by the tenant, allowing for seamless transfer of a deposit from tenancy to tenancy. The RLA believes this option is still the best method for improving the deposit experience for landlord and tenant alike.

National deposit loan for first-time renters:

The RLA believes most tenants will be able to afford a deposit or qualify for a deposit loan, but first-time renters may require assistance with their initial deposit payment. As such, the government should consider providing a national deposit loan for first time renters or increase the availability of local authority bonds.

No time limits on returning the deposit:

The current legislation gives a time limit for the return of deposits once the landlord and tenant have reached a decision on what should be returned. However, the government has now proposed a ‘hard cap’ on the timeframe. The RLA is concerned that tenants could abuse the system, and said time limits should not be put in place unless the landlord is allowed to extend the timeframe if tenant won’t allow them into the property prior to the tenancy end.

The full consultation document can be read here.

It is in everyone’s best interests, both landlords and tenants, to make sure that the rental sector works as smoothly as possible, and that renters are not trapped in accommodation that has become unsuitable for them due to circumstances beyond their control.

The move to let tenants carry a single deposit around with them is welcome from the RLA and should benefit all involved if the government decides to implement it.

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