The broken deposit product 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 also 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 take a loan from family and friends, to pay for the price of getting into a house. This could be due to the high cost of security deposits, which can also be coupled with an extended wait to possess a previous deposit returned.
Among tenants who had moved from a rented property in the past 2 yrs, 1 in 6 who did get their deposit back said hello took a lot more than a month to reach. Another of tenants needed to pay a new security deposit prior to 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 regarding deposit deductions. some 55% from the tenants who didn't obtain money-back in full challenged the choice.
Our research found the two most common causes of a deduction to become cleaning (50%) and damage to property (32%). But tenants and their letting agents or landlords are clearly this is not on the same page with regards to justified deductions: 81% of tenants who faced a deduction for cleaning felt it was unreasonable; 75% of those that faced a deduction for damage to property thought the same.
The landlord or agent must give reasons for any deposit deductions made, only one in 10 respondents told us that this didn’t happen, leaving them in the dark and up front.
Know your rights: how to proceed in case your landlord won’t return your deposit.
Have you'd your security deposit withheld?
We’ve been told by many tenants who feel their deposit money continues to be unfairly withheld, or not placed in a first deposit protection scheme, that is required by law.
One supporter told us: 'our landlord didn't 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 often than once had to 'start court proceedings to recuperate deposits which have not been protected.'
Ruth, who had lb1,500 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.
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What can deposit money be used for?
The results highlight a lack of clarity about what your deposit money can be used as. 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 situations in which reasonable deductions can be made.
Make sure guess what happens may happen for your security deposit before you begin renting.
Deposit adjudication schemes: need for reform
Clarity and transparency should also assist in improving rely upon the deposit adjudication system. Currently, only a third (33%) of tenants who raised a dispute asserted they were pleased with their deposit scheme.
We believe the government must review deposit adjudication schemes to be employed in the best interests of tenants. It must offer an effective way for renters to escalate complaints designed to their deposit adjudication schemes with the deposit adjudication service, if complaints haven’t been adequately resolved in-house.
It should evaluate 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 services and products, said:
'The number of people entering debt to pay for the cost of a new deposit is concerning, particularly when you consider that lots of have to wait a substantial time for you to get their previous one back, and may then face deductions that they don't think are reasonable.
'The findings highlight the deposit system is screaming for reform to really make it fit for purpose for that record numbers of those who are living in rented accommodation. We believe the government must tackle the issues that we have identified within our report directly to ensure that the rental market delivers for consumers.'
A Secretary of state for Housing, Communities and native Government spokesperson said:
'We are going to assist the millions of renters within this country by banning unfair letting fees and capping tenancy deposits. The new measures within our Tenant Fees Bill will save renters around lb240 million a year.
'The current tenancy deposit scheme is effective but we have recently generate a working group to ascertain if the machine could be improved.'
Read our full report: Reform from the Private Rental Sector: The Consumer View.