Proposals to allow renters to transfer deposits directly between landlords back on the table

July 01, 2019

Plans to introduce a scheme that would allow deposits to move between landlords instead of tenants putting down cash lump sum at the beginning of each tenancy, are being proposed by the government.

Housing Secretary James Brokenshire invited proposals to make it easier for renters to transfer deposits between landlords at the Chartered Institute of Housing conference last week. He said many people in the private rented sector “struggle” to find a second deposit for their new landlord which risked them “falling into debt or becoming trapped in their current home”.

“Freeing up deposits and allowing a renter’s hard-earned cash to follow them from property to property – as they move to take that perfect job, to move nearer to family, or find a place that suits their changing needs – will create a fairer housing market that works for all,” Brokenshire said.

Enabling tenants to ‘passport’ their deposits would still allow landlords to deduct money to cover any damages the end of the tenancy, but critics say the system may not give enough time for rental issues to be resolved, potentially leaving landlords out of pocket.

This is not the first time the scheme has been muted; London Mayor Sadiq Khan put the proposal forward some time ago, and the Residential Landlords Association suggested it as part of its feedback on the now Tenant Fees Act.

The National Landlords Association said passporting has potential, but “adequate thought” needs to be given to the needs of both tenants and landlords.

Chris Norris, director of policy and practice at the NLA, said: “Everyone agrees that moving between tenancies should be made easier and cheaper, but we also need to recognise why landlords take deposits. A deposit protects against damage or default, so landlords must be confident their costs are covered before releasing the tenants’ money.”