Housing Minister Heather Wheeler has rejected a call for a cap of no more than four weeks’ rent on deposits on private rented homes.
Labour’s Shadow Housing Secretary John Healey quizzed the minister about a deposit cap in a written question at Westminster.
He asked if the government had considered a four-week rent cap on deposits as part of the Tenants Fee Bill.
She told him that the government had considered introducing a deposit cap alongside the Tenants Fees Bill which will ban upfront fees paid by tenants on starting or renewing a tenancy.
An analysis suggested that a four-week rent cap would reduce around 38% of deposits held by buy to let and HMO landlords.
But the government felt landlords would be disadvantaged by the cap when chasing tenants to pay for damage or outstanding rent once a buy to let tenancy ended.
“Landlords and agents raised concerns that a cap of four weeks’ rent may result in a behavioural change, encouraging tenants to forgo their final month’s rent payment and leave landlords with less flexibility to accept riskier tenants, such as those with pets,” said Wheeler.
“It may result in an increased cost to landlords when their claim for damages or unpaid rent at the end of the tenancy is not fully covered by the deposit taken. While it is difficult to assess these impacts, we rejected a cap of four weeks’ or one months’ rent on that basis and have proposed to cap deposits at six weeks’ rent.”
She explained that a six-week rent cap would reduce around 14% of deposits, saving tenants £1.3 million.
“This loss would, on average, start four years after the introduction of a deposit cap once tenancies that benefited from it end,” said Wheeler.