Tenants: Make sure your deposit is protected
In central London, the average price of a home has been quoted as £1,411,905, while property for sale in Belgravia and other exclusive areas of the capital carries price tags only able to be met by overseas investors from the Middle East, Far East and wealthy football club owners from Russia.
Move away from the centre of London, and the average house price in the capital falls to £531,000. But that is still out of the reach of anyone earning an average London salary of £34,916.
This is why an estimated 25% of London’s growing population – which has now exceeded its previous peak of 8.6 million and is forecast to rise by another 1.4 million in the next 15 years – now live in private rented accommodation.
London’s under-supply of homes means students and young professionals no longer account for the majority of tenants. Experienced professionals and families are among the 850,000 households in the capital competing for good quality rental homes, which has pushed up their cost.
Renting is not a cheap option. Letting agents in Croydon and other outlying areas of the capital often ask for rents in the region of £1500 – the average rent in London.
This means tenants must find a deposit of around £2000 just to secure a place to live in the capital.
The good news for anybody in England and Wales who rents a home from a private landlord is that their deposit is protected by law if they have an assured shorthold tenancy agreement.
However, the growth in the number of people renting a home – often for the first time – has led housing charity Shelter to report that one in five private tenants in England are unaware that since April 2007 private landlords are obliged to put their deposit in a government-backed tenancy deposit scheme within 30 days of receiving the payment.
If a private landlord fails to place a tenant’s deposit with one of three officially recognised schemes, they face significant financial penalties. These include being ordered by a court to pay the tenant up to three times the amount of the deposit.
It’s not just Generation Rent that benefits. If you have been renting a home from a private landlord since before 6 April 2007 and paid a security deposit, the property owner had until 23 June to place it with the Deposit Protection Service, MyDeposit or the Tenancy Deposit Scheme.
The benefits for tenants
- When a landlord protects a security deposit, it means a tenant will…
- Get the full deposit back at the end of the tenancy provided they met the terms of the tenancy agreement
- Receive the amount of deposit agreed with the landlord within 10 days of the tenancy ending
- Be able to use a free dispute resolution service to investigate and decide how much of the deposit you should get back.
To ensure their deposit is protected from the outset, tenants should ask the landlord or letting agent which scheme it’s with before signing the contract.