The Centre for Policy Studies published a report on tenancy deposits last week, proposing that insurance-based options for landlords should be considered over tenancy deposits. With lower up-front costs for tenants and more solid protection in place for investments, this may be an idea worth considering.
The Down with Deposits: The Case for Rental Insurance report points out that in 2017, 4.79m households were in the private rental sector. This is 20% of all English households, and the number is continuously growing. The Centre for Policy Studies believes that, although the current housing crisis could be largely solved by the increase of home ownership, the Government should be doing what it can to help those who rent.
Robert Colvile, Director of the Centre for Policy Studies, has said: “This Government have a real opportunity to rectify the damage done by Labour to the rental market. By endorsing an insurance-based model as an alternative to a rental deposit, the Government would rectify an unfair system which polling shows is unpopular with hard-pressed tenants.”
Brian Sturgess, author of ‘Down with Deposits’, said: “Currently many people are simply unable to enter the rental market due to the need for a large upfront deposit to be provided before they move in.
“The proposals in this report offer a solution to the inherent unfairness of renters losing out on the interest they would have accrued on such a deposit, and often having to struggle to get their money back at all.”
Commenting on the Centre for Policy Studies report “Down with Deposits”, Dan Wilson Craw, Director of Generation Rent, said: “The tenancy deposit is a significant sum of money to find before you can move into a new home, and the system sorely needs to be made more affordable.
“Unfortunately proposals to replace it with an insurance policy will make participating tenants worse off, because they get nothing back when they move out. Even if you borrowed the money for a deposit and paid it off over a few months, the interest involved would still be less than the premium you’d pay for deposit replacement insurance.
“Instead of introducing a new Poverty Premium, we should make the existing system better by finding ways to allow payment by instalments, investing deposits so that tenants get a decent return on their money, and passporting them between tenancies.”