Which? report throws deposit system under spotlight

A damning report by respected consumer action group has sent ripples through the deposit world.

A recent report by consumer group Which? has revealed that on-in-six tenants are being ‘forced in to debt’ due to the broken deposit system, after having to wait up to four weeks for the return of their deposits.

Following the research, the group are calling on the government to open a review of the three government-approved deposit adjudication schemes - MyDeposits, Deposit Protection Service (DPS) and the Tenancy Deposit Scheme (TDS) – and are looking for an overhaul in the process, starting with landlords and agents.

Which? would like to see all landlords registered with their local authority, providing information to be detailed on a public database. This should be linked to the current database of rogue landlords and agents. They believe that agents also need to be policed, with an independent regulator put into place to oversee lettings and managing agents, and a legally binding code of practice to abide by. This would come with strong penalties for poor practice.

The research that prompted such keen action highlighted issues such as the wait that some tenants face to get their deposits back, and the impact that this can have on their next move, if that have to find the money for a new security deposit, or payments for a house purchase - 31% of tenants have to pay out again before seeing the return of the original deposit, said Which?.

According to the report, 43% of tenants surveyed revealed that they had taken on credit card debt, a loan or an overdraft, or else borrowed the cash from friends or family to cover the expenses that they faced following a deposit challenge, with more than half who did not see their deposit returned challenging the decision. Issues with the cleanliness of the property on check out remained the biggest reason for a deposit deduction.

The number of people going into debt to cover the cost of a new deposit is concerning, particularly when you consider that many are forced to wait a significant time to get their previous one back, and could then face deductions that they don't think are reasonable. The findings highlight how the deposit system is crying out for reform so that it is fit for purpose for the record numbers of people who are living in rented accommodation. We believe that the government must tackle the issues that we have identified in our report head on to ensure that the rental market delivers for consumers.

Alex Neill, Which? managing director of home products and services

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