LANDLORDS and letting agents have been accused of pushing deposit-free renting on tenants but charging them non-refundable fees instead.
The Property Ombudsman, Katrine Sporle, told The Sun that it is concerned that renters are being mis-sold “too good to be true” schemes.
An investigation by the BBC found that some tenants are being encouraged to take out these insurance schemes over a traditional deposit.
Zero-deposit renting typically require renters to pay a one off fee, usually one week’s worth of rent compared to the up to five week’s worth needed for a normal down payment.
But the one-off sign up fee is non-refundable, something that isn’t necessarily made clear to renters early on.
They can also push up rents to cover monthly costs, and some schemes charge tenants up to £100 just to dispute claims made by landlords when their tenancy has ended.
What can and can’t your landlord take money off your deposit for?
KNOWING what your landlord can’t take money out of your deposit for could save you a bundle.
Your landlord CAN take money out of your deposit for:
- Rent you might owe.
- Property you have damaged like marks on the walls or a coffee stain on the carpet.
- Something that you have lost or broken that were in the property when you moved in like cutlery or an ironing board.
Your landlord CAN’T take money out of your deposit for:
- Replacing something like an old carpet or paintwork that has naturally worn down with time.
- Fixing any problems like a leak which you told them about but they did not fix.
- Using your deposit money to decorate an entire room that just had some scuffs on the wall.
So far, the ombudsman has received 15 complaints regarding “mis-sold” deposit replacement schemes, one of which is currently undergoing a formal review.
The majority of the cases are from tenants who believe they’ve bought an insurance policy that will cover any damage.
“What they do not realise is that, although the landlord makes the claim, the policy pursues the tenant for the cost,” explained Ms Sporle.
What’s more, some renters were led to believe that they had to take out a deposit replacement scheme if they rented through a certain agency.
This is despite government guidelines that say tenants should be allowed to choose a traditional deposit if they want to.
Letting agents can earn commission from selling the third-party products as well as promote their own deposit replacement schemes.
Campaign group Generation Rent worries that agents are using them as a way of plugging the profit shortfall since agency fees were banned in June last year.
Is my deposit protected?
IF your deposit is protected it will be with one of these services, so always check with them to see which you need to speak to if you are having a disagreement with your landlord.
For England and Wales:
For Scotland:
For Northern Ireland:
David Cox from Arla Propertymark, which represents over 9,000 letting agents, told The Sun that he welcomes any scheme that helps tenants with the challenge of finding a new deposit before they have their old one back.
But it’s also important that renters are clear about the what costs they’re still liable for before signing up.
Regulator guidelines state that agents are obliged to explain the potential advantages and disadvantages of the product clearly to tenants.
The ombudsman added: “We are concerned that consumers are being mis-sold “too good to be true” deposit replacement schemes and, as a potential area for consumer detriment, we have raised the topic at both our industry and consumer forums.”
Renters will be spared from saving up hundreds of pounds for a deposit every time they move under a new bill announced in the Queen’s Speech.
The government wants to introduce a so-called lifetime deposit, which would ease the stress of forking over large deposits every time you move.
The lifetime deposit, which would be part of a Renters’ Reform Bill, would allow private renters to transfer their deposit from one property to the next.
It comes as it’s revealed that nearly half of tenants rely on credit or borrow money to pay for deposits.