MPs and landlords are at loggerheads over the acceptable level of deposits demanded of tenants in England.
Deposits should be capped at five weeks’ worth of rent, according to the Housing, Communities and Local Government Committee.
The government’s latest plan has been to cap the deposit at six weeks’ worth of rent.
Landlords groups believe that six weeks’ worth is realistic, otherwise “riskier” tenants could be blocked.
For example, the National Landlords Association (NLA) said a shorter cap would reduce landlords’ willingness to allow pets “by removing their flexibility to take a higher deposit to cover for pet damage”.
Initially, the government had favoured a much more stringent cap on landlords, planning to allow them to charge four weeks’ worth of rent as a deposit.
The disagreement has emerged during scrutiny of the government’s draft Tenant Fees Bill. The law change is aimed at introducing a ban on fees imposed on tenants by landlords and letting agents in England. A ban is already in place in Scotland.
The draft proposes prohibiting payments with the exception of rent, security deposits of up to six weeks’ rent, holding deposits of up to one week’s rent, and default fees. The commitment was announced by the Conservatives in the 2016 Autumn Statement.
The committee argued that security deposits set at six weeks’ worth of rent could cause financial difficulties for tenants. At five weeks’ worth, the private rented sector would become more affordable while also protecting landlords from rogue tenants, it argued.
Clive Betts, who chairs the Housing, Communities and Local Government Committee, said: “Moving home is already an expensive time and many people struggle to find large sums of money at the start of their tenancies to put down as a deposit.”
However Richard Lambert, chief executive of the NLA said: “There is no doubt that some agents have got away with excessive fees and double-charging landlords and tenants for far too long, but agents play a key role in managing properties and the ban will eventually boomerang back on tenants.”
Housing charity Shelter suggested that the average cost of fees had risen to £272 per person.
It warned that the committee’s proposals could still allow agents to charge through default fees. These fees allowed agents to charge tenants potentially unlimited sums for such things as letters sent for chasing late rent, it said.
“This ban was wildly popular with renters, which is why it’s so important that it does exactly what it says on the tin by completely scrapping rip-off letting agent fees,” said Greg Beales, director of policy and campaigns at Shelter.
“It is good to see the ban moving forward, but these proposals would leave the back door open for agents to continue charging tenants in different ways and let down the renters it was supposed to help.”