The Queen’s Speech in June proposed to ban tenants’ fees, a system that has already been adopted in Hackney. Nationwide, estate agents were appalled at this decision, which is likely to create more work for estate agents in the long run, and lead to a rise in rents.
Another proposal from the Queen’s Speech is likely to hit out at landlords, which, like the fees ban, could lead to a rise in rents. This is the decision to cap tenants’ security deposits.
Before the election and the Queen’s Speech, tenants’ security deposits usually had the same value as six weeks’ rent. This was considered to be a fair amount, which would easily cover damage to property.
The letting agent at Henry Wiltshire’s Royal Docks office, say, “Referencing enables estate agents to check that tenants have the funds to cover their monthly rents, but it doesn’t reveal how they treated their previous home. This means that no one really knows how “risky” a tenant is until the tenant moves in.”
What does the deposit cap mean for landlords?
Thanks to the deposit cap, renting property is now riskier than it used to be. Deposits may no longer cover the cost of repairs at the end of a tenancy, meaning that landlords will have to claim on insurance or find the money themselves.
This could put people off becoming landlords, which in turn could reduce the number of properties available for rent.
To counter the possibility of damage to the property, some landlords may ask for an increased number of inspections during the tenancy. Estate agents may charge extra for additional inspections, again at a cost to the landlord.
What does the deposit cap mean for tenants?
As with the ban on lettings fees, the deposit cap is only a short-term win for tenants. While they would be asked for less money at the start of the tenancy, they could see their rents rise as the landlord attempts to cover the cost of more frequent inspections and make up for the smaller security deposit. Even though this proposal was designed to protect tenants, it looks like tenants will ultimately be the ones to lose out.
Talk to Henry Wiltshire London Letting Agents
ARLA, the Association of Residential Lettings Agents of whom Henry Wiltshire is a member, is campaigning to have the deposit cap removed and lettings fees reinstated.
Henry Wiltshire supports ARLA’s campaign against the deposit cap. To let your Royal Docks property, you can contact the team on 020 3696 9616.
