One of the great problems when moving into a new rental property for many tenants is paying the deposit. Now, the government is looking into a possible solution that could make it easier for tenants through the idea of deposit ‘passporting’.
But what is this, and how would it work?
The Problem with Deposits
Raising a deposit is a challenge for many tenants. Often, when a tenant moves home, their deposit is tied up in the property that they are leaving, and they have to come up with another one before moving. This can lead to the need to borrow money to cover the deposit or miss out on renting the property altogether.
Sometimes, tenants don’t pay the last month’s rent and instead use this as the deposit for their new home. But this causes problems for the landlord if they have to use the deposit to cover any damage.
The idea of deposit passporting was first suggested by the RLA back in 2017. The idea is that rather than getting a deposit back from one landlord and then handing it over to a new landlord when moving house, the tenant can simply transfer the deposit between the two existing landlords
By having a deposit that moves with the tenant, this would make things a lot easier for everyone involved. The tenant could then simply make up any extra money they need if money is taken from their deposit for repairs.
Government Call for Evidence
The government is now interested and it has announced an official call for evidence. It is calling for more information on the problems that tenants face surrounding deposits as well as how the process could be improved.
The Housing Secretary, James Brokenshire MP, said that it can take “too long” for tenants to get their deposits back and that “some will struggle to afford it”. He wants to look at “innovative approaches” that will help tenants to move with greater ease.
How Would It Work?
One suggestion is that the tenant provides a certificate to the new landlord from a deposit scheme. The deposit would then simply be held here, and any deductions for repairs would be taken off if necessary.
It could even see tenants saving into their deposit accounts over time so that when they move they can provide a larger deposit for a larger property.
A Possible Future Solution
The idea of deposit passporting is an interesting one, and it would certainly seem to solve a lot of the problems that tenants face when they are moving homes.
There’s a long way to go yet, so we’ll have to wait and see whether it becomes a reality. But it certainly looks like an interesting proposal that would make life easier for both tenants and landlords.