Private Tenants Playing a Lottery with their Deposits, Nationwide Finds

Tenants renting their homes from private landlords are playing a lottery with their deposits, according to a new study by Nationwide.

The building society found that tenants can wait months for their deposits to be returned, with some losing their money for unjust reasons.

Finding a deposit for a new rental property can be a major barrier to moving, Nationwide points out, particularly when the deposit you’ve already paid on your current home takes some time to be returned, or faces substantial deductions.

As part of its ongoing focus on the long-term health of the private rental sector, Nationwide is calling for greater consistency in the treatment and return of tenancy deposits, so that tenants leaving properties in a suitable condition get their money back quickly.

Deposit returns

According to Nationwide’s survey of 2,000 tenants, it can take almost two months (1.8) on average for a tenancy deposit to be returned. However, in what appears to be a lottery of experiences, almost half (46%) received their deposits back within a month of leaving their property, while around one in five (18%) were made to wait more than three months. A further 4% had to wait over six months.

Paul Wootton, the Director of Specialist Lending at Nationwide, says: “There must be a better way to address the gap in deposits created when one tenancy ends and another begins. To ensure all private tenants have a better and more uniform experience, we need to consider more pragmatic solutions, including transferring deposits from one tenancy to the next, providing appropriate short-term loans or a guarantee. 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.”

Private Tenants Playing a Lottery with their Deposits, Nationwide Finds

Deposit deductions

While more than half (54%) of tenants had never lost a tenancy deposit, one in 14 (7%) had never actually paid a deposit, rising to one in seven (15%) of those aged 55+ (perhaps because they had rented the same property for a longer period of time).

However, over a third (35%) had previously lost some or all of their tenancy deposits, including 2% who lost all of their deposit every time they rented, and 5% who lost at least some of their deposit every time they moved home. A further 28% lost some or all of their deposits on some, but not all, previous rentals.

More than two in five (41%) tenants had experienced deposit deductions to cover the cost of end of tenancy cleaning, though this figure rose to 68% of 18-24-year-olds. Almost two in five (39%) had been charged for wear and tear, while 15% had their deposits debited for redecorating costs. 12% were charged for damage to contents, 5% for damage to buildings and 4% for previous rent arrears.

Official guidance suggests that, though landlords must keep deposits in a Government-approved tenancy deposit scheme – assuming that the tenancy started after April 2007 – before returning it, they may charge for any repairs or cleaning required to return the property to its original condition at the beginning of the tenancy. However, deductions cannot be made for ordinary wear and wear.

Wootton continues: “While our research suggests that the majority of landlords return tenancy deposits quickly and fairly, it also highlights remaining areas of confusion over what can or should be debited from deposit returns. 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.”  

Top tips for tenants 

Nationwide has put together some helpful tips for tenants, so that they can better understand their rights and responsibilities:

• Insist on a detailed inventory and check it with your landlord, so that you can note and agree any discrepancies at the start of the tenancy
• Take photographs and/or video, both at the start and end of the tenancy, to confirm the condition of the property
• Ensure that you leave the property in the same condition as it was when you moved in
• Understand that, if you rent with others, you will all be liable to cover the cost of any damage
• If damages occur, inform your landlord as soon as possible to agree repairs and prevent the issue getting any worse
• Check with your landlord before redecorating
• Understand that any rent arrears will be deducted from your deposit