Tenants struggle with 'broken' deposit system, says Which?

10 August 2018

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.

Rent a room rules to be tightened

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.”


In reply to by anonymous_stub (not verified)

The deposit scheme is certainly broken.Tenant has walked out, leaving front door open. He has left his belongings inside. The kitchen, cooker and equipment are absolutely filthy.Guidance I've received is that I can't dispose of his property, some of which stinks.Deposit agency won't forward his deposit to me although I've had an estimate for £1K for cleaning the flat and have incurred about £350 in court fees. I don't know where tenant is.

In reply to by anonymous_stub (not verified)

I don't want to fall into the same trap that this article falls into, by taking a complete bias because I'm sure some tenants may be unfairly treated when deductions are made from their security deposits, especially if their not given any reasons for the deductions as stated in the article. Which seems odd given, deposits are held by controlled 3rd parties where both sides need to agree deductions before apportionment is paid.However in my experience, renters rarely read their copy of the contract where their obligations are clearly shown and if they're not clear need to ask before they vacate. Even the honourable tenants who pay their rent on time, have a mindset similar to paying for a hotel room, in that if they pay their rent they are not responsible for cleaning or making good damage or items they take a fancy to.Another key deduction from deposits is that many withold payment of their last month's rent believing it can be paid from their deposit, which means of course they have an immediate shortfall for their next tenancy and the purpose of the security deposit at the very time it's more likely to be called upon has been severely depleted.The article says that more than half of tenants polled, challenged deductions. Not really that surprising as their is no further loss to them to do so and only the possibility the deductions might be reduced. So is a meaningless statistic without genuine substantiation established why the deduction was made and why those tenants challenged.

In reply to by anonymous_stub (not verified)

Just like H&S it's ALWAYS the company's fault... I recently had a full on dispute with tenants who left the washing machine door on the floor (6 month old Bosch), oil stains from bikes everywhere and dings in the walls from handlebars. Stains on the mattresses as they couldn't be asked to use sheets. Mice in the kitchen as they don't live hygienically, Fag stumps everywhere in the garden etc etc etc. But no! Its ALWAYS the greedy landlords fault and he/she should clean up after them etc - as if they were his children... When I was a tenant for 10 years in 4 places in London I didn't lose a penny on any deposit - guess why? Not living like an entitled pig helped...

In reply to by anonymous_stub (not verified)

insurance companies tend to go for the low risk client, there fore some tenants could soon find themselves high risk and as such un insurable and unable to rent .

In reply to by anonymous_stub (not verified)

Please look at this fairly. We had tenants who just left the property without saying they were leaving, tenants who left the washing machine broken with clothes inside, tenants who trashed stuff and didn't respond when asked about the damage. It goes on and sadly, this is what gives renters a bad name and then the deposit is needed for repairs and sometimes is not enough to do that. There are so many wonderful renters but you cannot tell one from another!

In reply to by anonymous_stub (not verified)

I couldn't agree more with this article. Landlords or letting agencies always, always look fora way of not paying back a deposit. I have had deposit deducted because the lawn was not mowed short enough....i mowed it 3 days befor moving out and the 2-3mm it had grown was too high!I had a seagull during the leaving inventory poo on the garage door and the lady say she has logged it as dirty and will cost £50 to clean--i used a wet wipe then and there.The difference is landlords are in a position of power and they abuse it. Even now with these deposit schemes, they don't actually give the money to the schemes, the bad ones spend it the day you give it to them.The deposit scheme will if they adjudicate-----which again takes 30days plus!!!!.....that the landlord owes you that money the scheme will pay you straight away and then have to chase after the landlord or file insurance claims.So that is hard work for the scheme people and it is much easier to let the landlord win.In my last experience i moved out early(after 8months instead of the 12months), gave 6weeks notice, found a replacement who moved in two days before end of my notice period and lo and behold landlord claims i forfeited the deposit by not completing the 12 month contract..... .So we go to dispute where i put forward the contract signed and paid by the new bloke and the Tenancy Deposit Scheme case worker says to me,,,,but the landlord SAYS the tenant only moved in 2months later..So there we have it the TDS will take verbal hearsay from the landlord over documented signed evidence....Turns out the landlord should have registered my deposit payment within 30days...now i'm going to nail him for 3X the amount just because he has been an ahole!

In reply to by Margaret (not verified)

Hi Margaret - I mostly definitely feel your pain - I had a tenant who disappeared, turned out he had fled to Romania and was wanted by three county police forces for various misdemeanours. The place was an absolute tip, stank, disgusting clothes strewn, pornographic material etc etc whole property had to be refurbished costing around £7k.Despite having another set of keys I wasn't allowed access because he took his house keys with him and as such couldn't be considered 'abandonment'. Took 3 months to get my property back through the courts (more cost) and to add insult to injury I had to store his disgusting possessions in case he came back for them!!! (more costs again and to say nothing of the lost rent).The laws protecting tenants and removal of rights for the rightful owners (landlords) are completely and utterly ridiculously unjust.It seems if you are caught stealing a packet of biscuits from a shop you will face harsher penalties than doing whatever you like to other peoples property. No political party or MP will stand up for landlords because tenants are perceived as the bigger vote winner.

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