Government plans to reform how renters pay tenancy deposits will revolutionise how millions of people move home within the private rented sector, it has been revealed.
Called Lifetime Deposits, they will be portable deposits that move from one rented property to the next and it’s an idea backed by everyone including letting agents, tenant organisations, the government and landlords.
For example, trade body the National Residential Landlords Association was the latest to get behind the idea, which will apply to England and Wales.
Key benefit
It points out that the key benefit is that Lifetime Deposits will stop tenants having to finance two deposits when moving home; many must stump up for a new deposit for their next home while waiting for their old deposit to be released.
But the NRLA is worried what happens if a tenant has kicked a hole in a door, broken a kitchen door or stained a carpet, for example – how is the damage paid for out of the ‘portable deposit’? How will the landlord be reimbursed for the cost of putting it right?
This is still up for debate but if it can be sorted out then this new kind of deposit is likely to be introduced next year. Lifetime Deposits form part of a planned Renters’ Reform Bill and there is a looming White Paper due on potential reform within the private rented sector. News is expected on this in the coming weeks.
Alicia Kennedy, Director of lobbying group Generation Rent, adds: “It is difficult to save five weeks’ rent to put down a deposit when your existing one is tied up in the current property.
“The government must also make sure the process of getting your deposit back is fair, to give renters trust in the system.”
Lettings agents agree. Their trade body, Propertymark, says: “An inability to find these additional funds is a huge drawback of the current system as it slows the market down; something which introducing a lifetime deposit could easily solve.”
CreditLadder can help you improve your credit score
If you want to improve your credit position by reporting your rent payments, CreditLadder is the only way to improve your credit score and position across all four of the main Credit Reference Agencies in the UK, namely Experian, Equifax, TransUnion and Crediva. Building up a high credit score has a lot of benefits, including helping you access finance at better rates - this can also help save you money.
CreditLadder also runs a free mortgage application service in partnership with Tembo which will tell you how much you could borrow.
Remember the information provided in this article is for information purposes only and should not be considered as advice.
