Renters battling through broken deposit system - watchdog

A "broken" deposit system is leaving house renters waiting weeks to have their money returned or having to challenge what they believe to be unreasonable charges, according to a consumer group.

Which? said the system is placing financial pressure on renters, finding that one in six (16%) of those who had moved out of a rented property in the last two years waited more than four weeks to get their deposit back.

A third (31%) of tenants had to pay a new security deposit before having their previous one returned.

The watchdog found that two in five renters (43%) who faced moving costs used a credit card, loan or overdraft, or borrowed money from family and friends, to cover the expense of going into a new property.

The study also found that half of tenants (55%) who did not get their money back in full challenged the decision.

The two most common reasons for a deduction were cleaning (50%) and damage to the property (32%). However, eight in 10 tenants (81%) who faced a deduction for cleaning and 75% of those who lost money for property damage thought this was unreasonable.

One in 10 said the landlord or agent gave no reason for why deductions were made.

Which? said the findings highlighted a lack of clarity about what deposit money can be used for, with 62% of landlords incorrectly believing it could be used for unpaid utility bills.

Just a third of tenants (33%) who raised a dispute said they were satisfied with their deposit scheme.

Which? is calling on the Government to review the deposit adjudication schemes to ensure they are working in the best interests of tenants, and said renters must have access to an effective route to escalate issues with an adjudication service if they do not feel their complaint has been adequately addressed.

It also wants a review of the current cash-based deposit system, and the considering of possible alternatives to avoid tenants having to cover two deposits when moving between properties such as insurance-style options and direct transfer of deposits between properties.

Alex Neill, Which? managing director of home products and services, said: "The number of people going into debt to cover the cost of a new deposit is concerning, particularly when you consider that many are forced to wait a significant time to get their previous one back, and could then face deductions that they don't think are reasonable.

"The findings highlight how the deposit system is crying out for reform so that it is fit for purpose for the record numbers of people who are living in rented accommodation.

"We believe that the Government must tackle the issues that we have identified in our report head on to ensure that the rental market delivers for consumers."

A Ministry of Housing, Communities and Local Government spokesman said: "We are determined to help the millions of renters in this country by banning unfair letting fees and capping tenancy deposits.

"The new measures in our Tenant Fees Bill will save renters around £240 million a year.

"The current tenancy deposit scheme works well but we have recently set up a working group to see if the system could be improved."

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