Speaking with some clients recently, explaining the Government’s latest wheeze – namely that security deposits are to be capped at one month’s rent – I found it quite remarkable that (frankly) they didn’t much care.
To put it into context, they didn’t like the idea. They thought it was too interfering, couldn’t see the point, but ultimately these private landlords were prepared to put up with it and limit deposits to a month’s rent. To quote one small landlord: “that’s all I ever ask for anyway”.
In a sense I understood his position. Since the announcement the NLA has been doing some research (more on that in a week or two) and it looks like the average deposit in 2017 (so far) has been the equivalent of less than five weeks’ rent.
Most deposits are returned in full, where deductions are made they tend to be relatively small, and arguably where a major dispute occurs the deposit will almost never fully compensate for the financial damage caused.
On the other hand, as I tried to explain to these clients, it completely missed the point.
So what’s the point?
The point is, if you’ll excuse my soapbox for a moment, that this proposal is described as ‘consumer protection’ but ‘consumer protection’ is supposed to start with the most vulnerable and extend outwards to provide protection from abuse and exploitation.
This seems to do the opposite. It starts from perspective of the majority and provides a marginal benefit – i.e. their next deposit will be guaranteed to be at most four weeks’ rent rather than five or six – but it ignores those who are already struggling to access the PRS.
Let’s face it, no landlord sits down and thinks (just for the sake of it) how can I make my property really unappealing to the most people? Deciding eventually to demand a massive and unaffordable deposit. They ask for a deposit that balances their perceived risk with the ability of their customers to pay.
Deposits aren’t just about security, they are about access.
Landlords and agents ask for higher than average deposits when they cannot satisfy themselves using traditional means that the applicant in front of them represents a ‘good risk’. This doesn’t mean they brand anyone a ‘bad tenant’, if anything it means they are prepared to go that bit further to help them find a home.
For instance, in my experience a deposit of six or eight weeks might be asked for if:
- A tenant can’t provide an adequate reference
- Maybe they have never rented before and therefore have no track record
- They might have CCJs
- They could even be trying to escape personal demons like substance abuse or a criminal record which would otherwise mark them as high risk; or
- They might just have a variable income, making it difficult to evidence such as shift work or the dreaded ‘zero hour’ contract.
It is also often a consequence of something fairly mundane such asking to keep pets, or for some kind of adaptation which may be costly to modify later.
All in all it is to do with vulnerability and instability and I cannot see how this will help anyone.
The market is crying out for ways to improve access and mitigate risk. All this seems to be is a way to provide yet another barrier to potentially good tenants accessing good homes, disguised as a sop to a segment of society excluded by too much government policy.
UKALA will be asking Government to think again. The problem is I’m just not convinced anyone is prepared to look past the poor reputation of letting agents to listen long enough to take note.