The broken deposit system is placing financial pressure on renters, a Which? report reveals. In too many cases, renters face weeks of waiting to get their deposit money returned, and have to challenge charges that they feel are unreasonable.
According to our research, 43% of renters who face moving costs have to use a credit card, loan or overdraft, or borrow money from family and friends, to cover the cost of moving into a property. This is often due to the high cost of security deposits, which can also be coupled with a long wait to have a previous deposit returned.
Among tenants who had moved out of a rented property in the past two years, one in six who did get their deposit back said it took more than four weeks to arrive. A third of tenants had to pay a new security deposit before getting their previous one back.
Find out all you need to know about tenancy deposit schemes.
Unreasonable deposit deductions
Our report highlights the issues tenants face with regard to deposit deductions. some 55% of the tenants who didn’t get their money back in full challenged the decision.
Our research found the two most common reasons for a deduction to be cleaning (50%) and damage to property (32%). But tenants and their letting agents or landlords are clearly not on the same page when it comes to justified deductions: 81% of tenants who faced a deduction for cleaning felt this was unreasonable; 75% of those who faced a deduction for property damage thought the same.
The landlord or agent must give reasons for any deposit deductions made, but one in 10 respondents told us that this didn’t happen, leaving them in the dark and out of pocket.
Know your rights: what to do if your landlord won’t return your deposit.
Have you had your security deposit withheld?
We’ve heard from many tenants who feel their deposit money has been unfairly withheld, or not placed in a deposit protection scheme, which is required by law.
One supporter told us: ‘our landlord failed to protect our deposit, and when we left, wanted most of it for spurious “repairs” and charged multiple times for the same things.’
Another, Joe, told us that he has more than once had to ‘start court proceedings to recover deposits that have not been protected.’
Ruth, who had £1,500 of her deposit retained when her landlord claimed she had created damp and carpet moths, felt she was unfairly accused. ‘Greedy agents, greedy landlord, horrible experience,’ she concluded.
Does this sound familiar? Let us know. Share your renting stories with us here.
What can deposit money be used for?
The results highlight a lack of clarity about what your deposit money can be used for. For example, we found that 62% of landlords incorrectly believe it can be used to pay outstanding utility bills. As a result, Which? believes that both tenants and landlords need clearer guidance on the circumstances in which reasonable deductions can be made.
Make sure you know what will happen to your security deposit before you start renting.
Deposit adjudication schemes: need for reform
Clarity and transparency should also help to improve trust in the deposit adjudication system. Currently, just a third (33%) of tenants who raised a dispute said that they were satisfied with their deposit scheme.
We believe the government must review deposit adjudication schemes to ensure they are working in the best interests of tenants. It must also provide an effective way for renters to escalate complaints made to their deposit adjudication schemes with the deposit adjudication service, if complaints haven’t been adequately resolved in-house.
It should review the current, cash-based deposit system, and consider possible alternatives to avoid tenants having to cover two deposits at once when moving between properties. These alternatives include new, insurance-style options or the direct transfer of deposits between properties.
Alex Neill, Which? managing director of home products and services, said:
‘The number of people going into debt to cover the cost of a new deposit is concerning, particularly when you consider that many are forced to wait a significant time to get their previous one back, and could then face deductions that they don’t think are reasonable.
‘The findings highlight that the deposit system is crying out for reform to make it fit for purpose for the record numbers of people who are living in rented accommodation. We believe that the government must tackle the issues that we have identified in our report head on to ensure that the rental market delivers for consumers.’
A Ministry of Housing, Communities and Local Government spokesperson said:
‘We are determined to help the millions of renters in this country by banning unfair letting fees and capping tenancy deposits. The new measures in our Tenant Fees Bill will save renters around £240 million a year.
‘The current tenancy deposit scheme works well but we have recently set up a working group to see if the system could be improved.’
Read our full report: Reform of the Private Rental Sector: The Consumer View.