One of the biggest problems for any tenant when moving house is saving up a deposit for the landlord. And this is why the government is now planning to introduce lifetime deposits.
But what are these exactly? Here we look at the details to find out what they will involve and how they could potentially help tenants.
The Problem with Deposits
Deposits can be a lot of money, sometimes as much as five weeks’ rent, and many tenants struggle to save up a deposit in the first place. But a potentially bigger problem arises when a tenant moves home.
Their new landlord needs a deposit before the tenant can move into the property. But the previous landlord may still be holding the deposit from the last place, which they usually keep until the tenant leaves the property.
This means the tenant has trouble getting their previous deposit back in time to send it to their new landlord, so they have to come up with a new deposit – costing them even more.
In order to come up with a new deposit, some tenants resort to using money from their savings or, worse, taking out loans and getting into debt.
The Government’s Plan
Lifetime tenancy deposits were first mentioned in the Queen’s Speech back in December 2019. Now, a new document has been released by the government called ‘Planning for the Future’. This again mentions support for a new ‘lifetime tenancy deposit’, making it increasingly likely that we will see them being introduced in the near future.
How Will It Work?
The document does not go into details about how these deposits will work. But the general idea is that the tenant will pay an initial deposit into a scheme where it is held securely. When they move home, this deposit will then move to their new landlord so they do not have to come up with a new deposit.
There will be issues to solve, like what will happen when the previous landlord needs to use some of the deposit to pay for damages caused by the outgoing tenant. But for now the plan is on the table and this is likely to be a good move for both tenants and landlords.
Other Plans for the Rental Sector
The document also mentions the Renters’ Reform Bill and how this will include abolishing ‘no-fault evictions’. It also mentions providing support for good landlords, without going into details about what this means.
Good News for the Rental Sector
The introduction of lifetime tenancy deposits sounds like it could be a great idea for both tenants and landlords. Tenants will not have the stress and worry of coming up with a new deposit every time they move – avoiding potentially getting into debt.
Although details still remain to be sorted out, it looks like the government is on the right path, and hopefully we’ll be hearing more about this later in the year.