The deposit cap -the maximum amount landlords are allowed to take in tenancy deposits – could be set at just three weeks’ rent under new plans announced by the Labour Party.
As the Tenant Fees Bill – which caps deposits at the equivalent of six weeks rent alongside banning letting agent fees – passes through Parliament, Labour has been attempting to amend the legislation to cut that cap in half.
Labour claims the plans would save tenants £575 compared to the government’s proposals – rising to £928 in London.
Melanie Onn, shadow housing minister, said in a tweet last week: “Labour is fighting for a new three-week limit for rent deposits”.
The government’s impact assessment for legislation puts the average UK rental deposit at £1161 – a 19% increase since 2013.
The firm uses low cost deposit replacement insurance to help landlords and letting agents rent properties faster and for longer by allowing deposit free renting for their tenants, while providing significantly more protection against property damage, legal costs and unpaid rent than traditional tenancy deposits.
The #ditchthedeposit movement campaigns for the government to encourage no deposit renting, and to allow the UK’s existing £4.5bn of deposits to be transferred into savings accounts helping renters save for homes of their own.
He said: “Parliamentary arithmetic suggests Labour’s efforts are unlikely to succeed, but that doesn’t mean that a three-week deposit cap couldn’t happen, and happen soon.
“Something a lot of people have missed about the Tenant Fees Bill is that it gives the Secretary of State the power to change the deposit cap whenever they feel like it. A future Labour government could effectively ban deposits on day one. The current Conservative one could do it tomorrow!
“This has huge implications for landlords. One recent study claimed tenant damage leaves landlords £800 out of pocket on average. In many parts of the country a six week deposit isn’t going to come close to financially covering them, let alone a three week one – and that’s before we consider unpaid rent and legal costs.
“No deposit renting using deposit replacement insurance finds you tenants faster, helps you keep them longer, and protects you better.
“As for political parties, if the Tories want to save renters £200 by passing Tenant Fee Bill and Labour wants to save renters £575 by amending it, why not save them £1161 by doing away with deposits altogether – while at the same time releasing £4.5bn into the economy or providing a real fillip to first time buyers.”