Renters Reform Bill Spotlight: Lifetime Deposits
What are lifetime deposits? How will the scheme work and how would they benefit me? These are just some of the questions coming in from members, following the publication of our Renters' Reform Bill proposals. Here campaigns officer Alexandra Williams takes a deep dive into the issues surrounding lifetime deposits and how the NRLA believes the scheme could operate to benefit landlords and tenants.
While we still do not have a clear timeline for when the Renters’ Reform Bill will be published, we do know the Government is committed to abolishing Section 21 repossessions - so-called ‘no fault’ evictions.
We released our proposals for the bill in December, calling for clear comprehensive grounds for possession, court reform and conciliation and a lifetime deposit system which is fair to both landlords and tenants. Over the past month, the policy team has held regional webinars to discuss the Renters’ Reform Bill and the NRLA proposals, with lifetime deposit a hot topic.
Why are lifetime deposits being introduced?
The Government wants to offer a new deposit option for tenants to make life easier for tenants in the private rented sector by making moving from one tenancy to the next for affordable.
What are the Government plans for lifetime deposits?
Government announcements have confirmed the Bill will include a new lifetime deposits facility. However as the Renters’ Reform Bill has not yet been published, the plans are more of a concept than a fully rounded policy. The basic concept is that a deposit can be ‘moved’ from one tenancy to another, so tenant doesn’t need to save for a new deposit every time they move house.
Under the present system a tenant has to pay a deposit on a new home before the one for their current rental is returned.
What are the NRLA recommendations for a lifetime deposits system?
The NRLA believes it is vital that the new system does not discourage landlords from making valid claims for damage to properties. Landlords cannot be expected to give up their right of recourse to a security deposit until such time that they are satisfied there will be no need to make a claim against it.
So how could the system work?
The NRLA has made two recommendations for lifetime deposits:
1. A financial bridging facility
A financial bridging mechanism would ensure that the new landlord is covered by a full deposit even if the deposit is partly in dispute with their existing landlord. This will be crucial to ensuring landlords have confidence in lifetime deposits. We have recommended that Government explores as many options as possible to find the right solution for both landlords and tenants, for example a short term, interest free loan for the tenant.
2. A deposit builder ISA
Similar to the Help to Buy ISA, the NRLA suggest a government protected savings pot available to renters. Neither party would have access to money deposited into the account unless ordered by an approved deposit scheme or at account closure, provided no charge was associated with the pot by a Tenancy Deposit Protection (TDP) scheme. Applicants would be able to demonstrate that the minimum required funds were in the account at the beginning of the tenancy and the account could be associated with a TDP scheme for the resolution of any disputes. Tenants would be able to save in this account beyond the minimum deposit required, mirroring the Help to Buy ISA, eventually using the funds for a deposit to buy their own home if they chose.
What about the current system?
Our members are generally satisfied with the current deposit system. With this in mind, we are lobbying for lifetime deposits to be a deposit option, rather than the only choice for tenants. We’ve worked with members to create all of our proposals, which you can read in full here, and continue to develop our policies.
More information
Keep an eye out for more articles spotlighting different parts of the Renters’ Reform Bill and the NRLA proposals over the coming months. The Renters’ Reform Bill campaign page has all the relevant updates about the Bill and allows members to share their feedback on our proposals.
