Deposits to be made transferable between landlords

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Tenancy Deposits:

In a move that would
help tenants who struggle finding deposits when moving to new
rentals, The Conservatives have announced they will bring in
legislation to enable deposits to be transferred, termed Deposit
Passporting.

It is estimated
there are around 4.7million tenants who have to find on average
around £1,000 to put down as a deposit each time they move and enter
a new tenancy. This money is required up-front, and often, because
of delays and getting an existing deposit paid back, they have to
find new money.

For those who
struggle to raise these large sums, and to pay for the first month’s
rent as well as the security deposit, sometimes running into
thousands in the capital, this news will provide them with a boost
and a relief.

The Tories are
anxious to do all they can and help renters, knowing they now
represent a growing cohort of young voters, so moves like this, they
think, will prove very popular.

The idea is that
tenants would be able to transfer their deposit from an existing
landlord direct to a new landlord, without having to find a new lump
sum themselves, apart from topping up any increase.

The Tories think the
main beneficiaries will be those on low incomes, students and
retirees who traditionally would find it hard to find these large
sums of money at the start of a new tenancy.

Landlord groups and
representatives have welcomed the move, but are concerned about the
mechanics of the scheme and how this would work out in practice. For
example, what if there’s a dispute over damage claims?

But landlords
acknowledge that anything that makes it easier for tenants to obtain
a new tenancy with sufficient and readily accessible funds, can only
be a good thing.

The Ministry of Housing, Communities and Local Government (MHCLG) opened a consultation on the necessary reforms to tenancy deposits that will help tenants move more easily which closed on 5 September 2019. The consultation exercise will be evaluating the feasibility of passporting deposits when tenants are changing tenancies.

The National
Landlords Association (NLA) has emphasised that deposit passporting
needs to be carefully designed to ensure that landlords are not
disadvantaged from making valid claims against their tenants’
security deposits.

Chris Norris,
director of policy and practice at the NLA, said:

“We must make sure
that adequate thought is given to the needs of both tenants and
landlords. Everyone agrees that moving between tenancies should be
made easier and cheaper, but we also need to recognise why landlords
take deposits. A deposit protects against damage or default, so
landlords must be confident their costs are covered before releasing
the tenants’ money.”

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