GOVERNMENT PAPER DEBATES TENANCY DEPOSIT SCHEMES

05 September 2018

In wake of the Third Reading of the Tenant Fees Bill, which is due to take place today, the House of Commons have published their briefing paper regarding Tenancy Deposit Schemes. The paper summarises the purpose of the scheme, outlining that all private landlords are obligated to protect their tenant’s deposit through the Tenancy Deposit Scheme. The paper also outlines the main functions of the Tenancy Deposit schemes, as well as exploring the issues and criticisms surrounding the scheme.

The main criticisms discussed within the briefing paper, include: non-compliant landlords, prolonged dispute resolution, abuse of the scheme, and resolute loopholes.

There have been further criticisms of the current Tenancy Deposit Scheme, with the Consumer Association group Which? labelling the scheme “broken”, due to the prolonged re-payments of deposits to tenants.

Which? conducted a study in relation to the scheme, showing that more than half of tenants, who did not receive re-payment, had to pay out a new security deposit before receiving their original deposit back.  Which? have now called on the government to review the scheme, which means reviewing the approved deposit adjudication schemes, including: Deposit Protection Service (DPS) mydeposits, and Tenancy Deposit Scheme (TDS).

The government have indicated that one of the main problems with tenancy deposits is the fact of unaffordability for tenants. Therefore, they are willing to cap what tenants pay to their landlords before renting a property, which will potentially be set at the maximum rate of six weeks rent.

Other members of parliament, including Labour MP, Sarah Jones believe that six weeks’ rent is still an unaffordable amount for tenants to pay, advising that deposits should be reduced to a maximum of three weeks rent.

However, the Government responded to this proposed reduction, stating:

“If we lower the cap on deposits to three weeks’ rent, there is a higher risk that a deposit will no longer fully cover the damages to a landlord’s property or any unpaid rent.

We have listened to concerns that a cap at four weeks’ rent or less may encourage tenants to forgo their final month’s rent.

A cap of six weeks provides the flexibility that landlords need to rent to higher-risk tenants.”

It is evident that there is an imbalance between protecting landlords and ensuring deposits are affordable for tenants, although expectantly this will even out before the official passing of the Tenant Fees Bill, which should be approved by Spring 2019.

 Here at Three Graces Legal we can assist with any Landlord and Tenant issues, including claiming back your Tenancy Deposit.

Please contact us on 0151 659 1070 to see how we may be of assistance.