A broken deposit system is placing financial pressure on renters in England, with tenants sometimes having to wait weeks to get their deposit returned or having a battle to get unfair charges removed, a Which? report reveals.
This comes in the wake of a report earlier this week by think tank Centre for Policy Studies (CPS), which suggested that deposits for renting a home should be replaced by more affordable insurance-backed schemes.
Research by the consumer group found that two in five (43%) tenants who were planning to move to a new rental property had to use a credit card, loan or overdraft, or borrow cash from friends and family, to pay for a deposit on their new home and moving costs.
Meanwhile, one in six (16%) tenants who had moved out of a rental property in the past two years say it took more than four weeks to get their deposit back, with a third (31%) having to pay a new deposit before they had received their previous one back.
‘Unreasonable’ cash deducted from deposits
Researchers also found that tenants face problems getting the landlord to return 100% of their deposit, which it says, on average, is £803.
The two main reasons landlords cite for keeping cash from the deposit were cleaning (50%) and damage to the property (32%).
However, eight in 10 (81%) of 900 tenants polled had money deducted for cleaning, and 75% of those who had money taken off for property damage think this was unreasonable. Surprisingly, one in 10 (9%) of those polled say the landlord or agent gave no reason for why deductions were made.
Over half of tenants (55%) who didn’t get all their deposit money back challenged the decision.
Six in 10 (62%) of 900 landlords polled wrongly believe it can be used to pay money owed on utility bills. As a result, Which? believes tenants and landlords need clearer guidance on what reasonable deductions can be made.
Currently, there are three government-backed tenancy deposit schemes (TDP) in England and Wales where a deposit can be registered: Deposit Protection Service, MyDeposits, and Tenancy Deposit Scheme. There are separate TDP schemes in Scotland and Northern Ireland.
While these schemes offer dispute resolution services, Which? says there is a lack of trust in how disputes are adjudicated – only a third (33%) of tenants who raised a dispute say they were satisfied with the scheme.
It is campaigning for the government to review the deposit adjudication schemes to ensure that tenants can escalate their complaint if they feel it has not been adequately dealt with and has called for an independent regulator for lettings and management agents with a legally binding code of practice to be created.
Like the CPS, it also suggests that the government should review the current cash-based deposit system in favour of new insurance-style options and direct transfers of deposits between properties so that tenants don’t have to pay two deposits when moving home.
Renters forced to wait a ‘significant time’ to get deposits back
Alex Neill, Which? managing director of home products and services, says: “The number of people going into debt to cover the cost of a new deposit is concerning, particularly when you consider that many are forced to wait a significant time to get their previous one back, and could then face deductions that they don’t think are reasonable.
“The findings highlight how the deposit system is crying out for reform so that it is fit for purpose for the record numbers of people who are living in rented accommodation. We believe that the government must tackle the issues that we have identified in our report head on to ensure that the rental market delivers for consumers.”