Landlord blog: Tackle supply & demand imbalance by helping landlords, not hindering

Published: 21/05/2014

From rent caps to three-year tenancies, landlords have faced a torrent of criticism in recent weeks and now there is call to ditch deposits. Rob Denman considers what such a move could mean to landlords:

“There’s a certain amount of risk that comes with letting property; regardless of how thorough a background check you undertake on tenants you are ultimately allowing strangers into your property. As a means of minimising that risk landlords ask for a deposit, usually a month’s rent, so should the property get damaged or tenants do a midnight flit, a landlord does not bear too big a financial brunt.

“So I am somewhat perplexed about talks to ditch the deposit. To me it’s just another example of appeasing renters and penalising landlords.

“I know one letting agent has done away with deposits, replacing them instead with a one-of-a-kind landlord insurance. I am unsure about what this specialised form of protection covers and am presuming when I say it would be the insurance company that was liable for the cost of any damage or arrears rather than the tenant. If this is the case, then what deterrents are there for tenants to tow the line? Surely the risk of losing a few hundred quid is much stronger driver than, well, nothing especially if things are as tight as everyone is protesting?!

“The letting agent in question even went as far as to say that ‘ditching deposits is a foolproof way of finding and keeping good tenants’. For a start, nothing is foolproof when it comes to letting property and, while I appreciate that tenants may be struggling to raise a deposit, this doesn’t mean they are entitled to a free pass. Wannabe homeowners are struggling to get a deposit for a house so should we just dish out 100% LTV mortgages again?! And if a tenant can’t raise a deposit then what does that say about their capability to pay their rent.

“One thing we are all in agreement about is the severe imbalance between supply and demand in the private rental sector. But what astounds me is the lack of recognition for the role landlords have to successfully address this disparity. We should be doing as much as we can to encourage more landlords to enter the market not placing further obstacles in their path.”

Rob Denman is a solicitor and Head of GW LET (Landlord Empowerment Team), specialising in such landlord legal issues as rent arrears, tenant eviction and tenancy deposit disputes. In his spare time Rob enjoys watching football and running. He is currently training for his second half marathon.

Content correct at time of publication