Last month, the UK Government announced plans to limit tenancy deposits in England to the equivalent of one month’s rent, plans which many landlords are concerned about because tenants may now be less inclined to pay their last month’s rent. Now, David Lawrenson, an expert in the lettings industry has said that the plans, in addition to plans to reduce reservation fees to one week of rent, will directly hurt tenants in various ways
Mr Lawrenson points out that currently, the average tenancy deposit in the private rental sector is between five and seven weeks of rent, with this figure highly influenced by the overall property market and the type of tenant renting the property; landlords and agents consider a range of personal factors such as employment and finance when choosing a deposit figure. He also says that letting agents are highly unlikely to charge overly high tenancy deposits because otherwise, tenants will simply seek out other estate agents offering cheaper tenancy deposits.
While tenancy deposit caps may not affect the majority of private rental tenants in the UK, Mr Lawrenson explains that there is a select group of vulnerable people who will find it much harder to rent properties now, these groups include those on low incomes, those on benefits, and students.
As letting agents and landlords assess new tenants on their ability to pay their rent, those people in the UK who are at a higher risk of not paying their rent will be overlooked if a deposit cap is brought in. Mr Lawrenson reveals that these groups of people include those who cannot provide previous landlord references, people on low incomes, people who receive benefits, students, and often families or individuals with pets. He continues to say that these people are already limited in the housing options available to them, and by capping the tenancy deposit, it will simply make it harder or even impossible for them to find a suitable place to live.
In order to try and tackle the issues of agency fees, Mr Lawrenson feels that more transparency is needed within the market, and he feels that companies such as Zoopla and Rightmove should display the agent fees and deposit amounts when advertising properties through their portals.
We feel it’s important to highlight that the changes to tenancy deposits are only taking place in England, but the Welsh Government is currently conducting research to establish whether the new regulations should be applied to Welsh rental properties.
Whether you’re a landlord looking to let your property or someone looking to rent a Cardiff property, our experienced lettings team is here to help. To find out more about the services we offer here at CPS Homes, get in touch today on 02902 668585, email email@example.com or pop into one of our three Cardiff branches in Cathays, Cardiff Bay or Roath. We look forward to helping you find your dream home!