RLA call on deposit reform

12 Sep 2019 01:04 PM

A proposal allowing tenants to transfer a deposit between landlords when moving house has been outlined by the RLA in its response to a government consultation on deposit reform. 

The government launched its call for evidence asking for information on the barriers tenants face when it comes to providing a ‘second deposit’ when moving from one tenancy to the next and what can be done to speed up the return of deposits to tenants.

It is also looking at affordability issues and innovative ideas to make it easier for tenants to move.

Current rules

Under the current system many tenants have to raise a deposit ‘twice’, when moving. One deposit is tied up in the property they are leaving, while the second is needed to secure the property they wish to move into.

The RLA believes it would be easier for all involved if a tenant’s deposit could follow them from property to property, with the tenant making up any shortfall caused by deductions.

The was idea mooted by the association in its 2017 election manifesto.

In its response to the consultation, the RLA recommended: 

• 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. 

To read the consultation document in full click here.