Caps on security deposits are to be reduced from the equivalent of six weeks of rent to five in new legislation going through Parliament.
The Government have confirmed that rentals of less than £50,000 annually will see deposits cut to a maximum of five week deposits as opposed to six.
Six week caps will still remain in place for rentals exceeding £50,000, however.
As part of the move that originates from the Tenant Fee Ban, Landlords and agents will not be able to include the different default fees into a tenancy contract and tenants cannot be charged one amount for a damaged item that actually only costs another amount to replace.
Default fees will only be allowed to be charged by landlords or agents for late payments of rent or lost keys.
In response to the Government’s move, David Smith, Policy Director for the Residential Landlords Association said:
“If this is true, landlords will feel badly let down by a Government which says it wants to support good landlords. The Government had accepted that a cap of six weeks was the minimum many landlords require. This is needed to address the problem of tenants who fail to pay the last month’s rent and leave a property damaged.
“Ministers claim that they want to cut the cost of renting yet this is another measure the Government is taking that will further cut the number of landlords and properties available as demand continues to rise, so actually driving up rents up.”
Richard Lambert, Chief Executive Officer of the National Landlords Association also commented:
“A six-week cap is the lowest landlords find acceptable. Does the Government really not realise that if landlords don’t think the deposit covers the risk of damage or unpaid rent, they will be even more cautious about who they let to? All this will do is make it harder for tenants with poor credit ratings or who want to have a pet to find a suitable home.
“This is clearly a political move aimed at the renters’ vote. It is not a policy for business.”