Rental Deposits Could Soon be Capped at 5 Week’s Rent

The government may be embroiled in Brexit woes right now, but it has managed to find the time to do a u-turn on its decision to cap tenant deposits at six weeks. Lord Kennedy of Southwark and Lord Bourne of Aberystwyth have tabled an amendment to the Tenant Fees Bill that would see deposits capped at five weeks instead of six weeks.

More Pressure on Landlords

Critics say this will cause even more landlords to leave the private rental sector, creating a bigger shortfall in available rental properties.  Most landlords take a deposit to cover the cost of any damage the tenant might cause to the property. A deposit can also be put towards rent arrears. High-risk tenants, such as those with pets, will find it much harder to persuade a landlord to accommodate them if deposits are capped even further. Any business-minded landlord will do the maths and decide the deposit doesn’t protect them from risk.

A four-week rent cap was initially proposed, but the government took note of arguments from the National Landlords Association, which stated a four-week cap was completely unacceptable to landlords. They advised that a six-week cap was more appropriate.

Five-Week Cap Helps Tenants

The NLA concedes that a five-week cap would be beneficial to tenants struggling to find enough money to pay for a rental home, but six weeks’ worth of deposit gives landlords greater flexibility.

“A six-week cap is the lowest landlords find acceptable,” says Richard Lambert from the NLA.  “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?”

The Government’s Motives are Political

The NLA believes this latest amendment is intended to gain favour from renters rather than boost the private rental sector.

In addition to this amendment, the government is also clamping down on excessive charges for minor damage. Some landlords and letting agents charge ridiculous fees for small things, such as charging £60 to replace a smoke alarm when the council does this for free or £45 to fit a new lightbulb.

“Tenants across the country, whatever their income, should not be hit with unfair costs by agents or landlords,” says Rishi Sunak MP.  “This government is determined to make sure our housing market works and this new provision in the Tenant Fees Bill will make renting fairer and more transparent for all.”