A year of a ban on letting agent fees, a cap on tenancy deposits, new measures aimed at boosting home ownership and a new homelessness reduction strategy is the perfect one for the private rented sector to embrace zero deposit renting – a leading lettings expert believes.
Prime Minister Theresa May used her New Year Message to declare fixing the housing crisis her “personal mission”, promising to “restore the dream of home ownership”.
Ajay Jagota of deposit-free renting firm Dlighted heads the #ditchthedeposit campaign, which is calling on the government to take steps to encourage landlords and letting agents to replace traditional tenancy deposits with deposit replacement insurance, allowing £4.1bn of deposits to be moved into Help to Buy ISAs designed to help first time buyers save for a deposit for their own property.
The year will see the Tenants Fees Bill go before Parliament, giving the Communities Minister the power to introduce a moveable cap on tenancy deposits and banning letting agent fees in England.
Industry experts predict the measures are likely to make it more difficult for Letting Agents to differentiate themselves from the competition and maximise profitability.
Research from Dlighted shows 85% of tenants reporting that they chose their letting agency because it offered deposit free renting.
2018 will also see the government’s new Homelessness Taskforce start work alongside the development of a long-term cross-government homelessness strategy.
Ajay Jagota is founder of deposit-free renting firm Dlighted, which uses low-cost deposit replacement insurance to allow landlords and letting agents to let properties deposit-free, while offering over £600,000 of protection against unpaid rent, property damage and legal costs.
He said: “I welcome the Prime Minister’s personal commitment to supporting people to buy their own homes, but at this point she is yet to outline her intentions for helping people save for a deposit – particularly those without access to the Bank of Mum and Dad.
“The government could help at next-to-no-cost to the Treasury by turning £4.1bn into Help to Buy ISAs, providing vital stimulation to the economy at the same time.
“This is a huge and challenging year for the private rented sector. With the deposit cap and letting agent fee ban coming in off the back of previous tax rises and Right to Rent regulations, profits are being squeezed at a time when administrative burdens are increasing. Deposit-free renting saves businesses time and money, while bringing more customers through the door.
“2018 is the ideal year for the industry to embrace the commercial and economic benefits of zero deposit renting.
“There’s a growing moral case for deposit-free renting too. A member of the Dlighted team was helping out at a homeless shelter over Christmas and was shocked to find so many of the guests telling him that the biggest obstacle to finding a roof over their head was a tenancy deposit.
“ Letting agents will have landlords ringing up asking them why they haven’t found a tenant when there are potential customers literally desperate move in to those properties who can’t because they can’t afford a deposit.
“This isn’t just a moral outrage, it’s commercially crazy.”