Making rental deposits easier to transfer
Good news for tenants today. In future it could be made easier to free-up rental deposits when moving from one property to another via "deposit passporting". Speaking at a major housing conference in Manchester, Communities Secretary James Brokenshire said this was one of the ways that the housing market could be made fairer.
Deposit passporting sounds like good news for tenants but what about landlords?
"Ministers are inviting proposals to make it easier for renters to transfer deposits directly between landlords when moving from one property to the next," he said.
This is because some tenants find it a struggle to provide a second deposit to their new landlord. Until their original deposit – on the home they are moving out of – is returned by their current landlord, many renters find themselves in danger of getting into debt or becoming trapped in their current home. With more than 4 million people living in the private rented sector, the government want to understand the scale of this problem.
Shelter welcomed the news. “A deposit passporting scheme would help the country’s hard-pressed renters avoid having to stump up a fresh deposit before they’ve got the old one back, " said the housing charity in The Times.
But what about landlords? There is a reason why deposits are withheld until the check-out process has been completed – and that’s because not all renters leave properties in good order. It may not always be possible to inspect a property until after the tenant has left. And any damage may not be immediately obvious. If the deposit has already been “passported” that could leave the previous landlord high and dry.
solution set out by James Brokenshire today is that the previous landlord
should still be able to claim part of the deposit for any damages, and the
tenant could top up the deposit if necessary. So could it work? Maybe.
The next step is a Call for Evidence. The industry will be asked to consider whether the scheme should be government-backed, or whether existing deposit schemes could be tweaked to take passporting on board. The Secretary of State told the press today: “We need to do this thoughtfully”. Let’s hope he means it.
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