The government has confirmed that deposits on a rented home will be limited to five weeks’ rent instead of six.
Mortgage Strategy reported this morning that the deposit cap reduction was likely to come into effect – and landlords aren’t happy.
The move has been announced as part of the Tenant Fees Bill and is a further step by communities secretary James Brokenshire towards ending costly fees imposed on tenants when they first move into their property.
Residential Landlords Association policy director David Smith says the move means landlords will feel badly let down by a government.
He says: “The government had accepted that a cap of six weeks was the minimum many landlords required. This is needed to address the problem of tenants who fail to pay the last month’s rent and leave a property damaged.
The National Landlords Association described the rule change as “a reckless move could force more landlords out of the market”.
NLA chief executive officer Richard Lambert says: “A six-week cap is the lowest landlords find acceptable. Does the government really not realise that if landlords don’t think the deposit covers the risk of damage or unpaid rent, they will be even more cautious about who they let to?
“All this will do is make it harder for tenants with poor credit ratings or who want to have a pet to find a suitable home. This is clearly a political move aimed at the renters’ vote. It is not a policy for business.”
Other amendments to the Tenants Fees Bill include protecting tenants from unfair fees by limiting the type of default fees that can be charged by landlords and property agents. This change means that during the tenancy landlords and agents will only be able to charge fees to replace lost keys or for late rent.
Landlords will still be able to claim back costs for damage through the tenancy deposit at the end of the tenancy. However, landlords and agents will not be able to write lots of different default fees into a tenancy contract and tenants cannot be charged hundreds of pounds for a damaged item that actually only costs a few pounds to replace.
The Tenant Fees Bill has completed its passage through the House of Commons and is nearing its final stages of consideration in the House of Lords.