With the RLA calling out the Tenancy Deposit Scheme for offering terrible value for money and pushing up rents, Ezylet calls for another look at how UK property letting deposits are protected.
The Tenancy Deposit Scheme (TDS) is costing landlords far too much, while protecting too few deposits. That’s not just our opinion, but that of Property Economics Professor Michael Ball.
In a recent reportfor the Residential Landlords Association, Professor Ball finds people letting property currently spend more than £275m per year to comply with the TDS. But only £7m in unreasonably withheld deposits is returned annually– an amount 40 times smaller than the cost of the scheme.
It’s a situation Professor Ball calls “expensive” and “poor value for money” for people letting houses and letting flats. But that’s not all it is.
Pushing up rents
While it seems reasonable to argue that the TDS has a preventative value, promoting good conduct by landlords, it has further negative impacts too.
The extortionate costs of the scheme are filtering through to tenants in the form of increased rents and even increased deposit values. The Independent reported in Junethat UK rental property deposits have risen by a whopping 50 per cent since 2007 – the same year the TDS was made mandatory for all landlords.
So is the Tenancy Deposit Scheme even worth it? At its current cost, no.
Professor Ball notes that a 1998 NACAB report, “Unsafe Deposits,” claimed as many as 48% of tenants had a deposit unfairly withheld. Data like this strengthened the case for mandatory deposit protection.
Yet here we, seven years on from the introduction of TDS, and the complaints from tenants just aren’t there.
Time for change
We’re not arguing for the scrapping of deposit protection. We believe it’s really important to promote best practice among landlords and to protect tenants from unfair treatment.
But we think it’s time to look again at the ridiculously high cost of the scheme - especially considering how few deposits actually need its protection.