The security deposits that tenants leave with their landlords or their letting agents will be reduced from 6 weeks to 1 months’ rent, as part of the government’s proposals announced in the Queen’s Speech.
The move on security deposits is one of many changes planned to “make the private rental market more affordable and competitive”, the government have announced.
Richard Lambert, CEO of the National Landlords Association (NLA) said: “We estimate that around 40% of deposits exceed one month’s rent. Whilst capping them may reduce the move-in costs for some, it will increase the temptation for others to view the deposit as the last month’s rent, leaving landlords out of pocket at the end of the tenancy if, for example, the property has been damaged.”
Richard continued: “Some landlords use a higher deposit to give them the extra confidence they need when letting to higher risk tenants, so this could also have the unintended consequence of deterring them from offering their property to those likely to be struggling with affordability in the first place”.
This move could drastically affect both landlords and tenants looking for a place to rent. If a landlord is unsure or not entirely convinced that a tenant can pay their way, they are unlikely to offer their property to that tenant. Leaving the tenant without a home and the landlord without a tenant, which is not a great scenario for anyone.
Godfrey Noles has a solution which will help minimise the risk for Landlords when letting out their properties to tenants.
The Tenant Deposit Legal Protection Scheme.
Tenant Deposit Legal Protection is a legal expenses insurance contract designed to provide representation for you in a claim against your tenant following a dispute over dilapidations caused to the property which is let out by you.
Essentially, the Tenant Deposit Legal Protection Scheme will safeguard you against tenants who try to use their deposit as there last month’s rent and then leave the property damaged. You will be covered for up to £50,000, therefore, allowing you to let your property out knowing that you have a contingency plan and a safeguard if your high-risk tenant tries to leave without paying for damages out of their deposit.
Safeguard yourself and continue letting out your properties worry free.
For more information or a chat in more detail please do not hesitate to contact me,