The Nationwide has today called for the rental deposits system to be reformed after revealing that it takes renters on average nearly two months to get their deposits back after their tenancy ends and that one in five have to wait more than three months.
The building society is calling for greater consistency in the treatment and return of deposits so that tenants can get their deposit back faster, and a more practical approach by landlords and letting agents to handling them.
“We need to consider more pragmatic solutions, including transferring deposits from one tenancy to the next, providing appropriate short-term loans or a guarantee”, says Paul Wootton (below), Nationwide’s Director of Specialist Lending.
“Nationwide is already working with other organisations who are equally aware of the need for a practical approach that meets the needs of both tenants and landlords, without being an obstacle to moving home.”
Nationwide’s research among 2,000 renters found that 4% of those canvassed reported waiting for more than six months for a rent deposit to be returned, while more than a third of renters had previously lost some or all of their tenancy deposit.
The most common reasons for deposit deductions are property cleaning, wear-and-tear and redecorating costs although rent arrears are relatively uncommon. Only 4% of those canvassed reported unpaid rent being deducted from their deposits.
“Both landlords and tenants can take simple steps at the start and end of each tenancy to protect against discrepancies and understand their own responsibilities – resulting in a better experience for all.
“However, where end of tenancy issues cannot be resolved, we need a specialist housing court, equipped to provide fast and effective arbitration, as well as greater confidence of equitable experiences for all.”
Jon Notley (right), CEO of alternative deposits platform Zero Deposit says: “The Nationwide research supports our view that the current deposit method is not working, and the market needs an alternative.
“Many tenants simply can’t afford the huge upfront sums needed when moving, which slows the process and damages yields for landlords.
“Zero Deposit offers a credible alternative to paying a large deposit upfront, and at the same time, provides the landlord with a guarantee for the value of a six-week deposit, which comes with all of the protections of a regulated product.”