In this post, we'll take a closer look at the Government's proposed lifetime deposit scheme.
In a nutshell...
The lifetime deposit will allow landlords to hold a single deposit across a lifetime of tenancies for the same tenant, simplifying the deposit experience for people renting, rather than having to pay the deposit every time they move home.
Let's rewind. Back in May 2021, the Queen held a speech where the Government's intention to "enhance the rights of those who rent" was confirmed.
Following the speech from the Queen, the UK government has confirmed Lifetime Deposits are around the corner, with proposals for a new "lifetime" tenancy deposit model set for release in Autumn 2021.
The Government says they are committed to building back fairer and having a Better Deal for Renters in England.
So, what is a "Lifetime" deposit?
The new model of a "Lifetime" deposit aims to "ease the burden on tenants when moving from one tenancy to the next, helping improve the experience of those living in the private rental sector".
What can we expect in the coming months?
The big question is, what does this mean for renters, landlords and estate agents? Below we've highlighted some key briefing notes from the speech. You can see all of them here.
- Reforming tenancy law to abolish Section 21 'no fault' evictions and improve security for tenants in the private rented sector and strengthen repossession grounds for landlords when they have a reasonable cause.
- Bring bold reforms to drive improvements in standards in rented accommodation, including by ensuring all tenants have a right to redress and ensuring well-targeted, effective enforcement that drives out criminal landlords, for example, exploring the merits of a landlord register.
Why a lifetime deposit?
Renting sucks — anyone who rents knows it.
According to the Office for National Statistics, the current average deposit sits at £1,054, making moving home tricky and unaffordable for many renters across the UK.
It's well known that most tenants, such as students and young professionals, tend to frequently move from rental property to rental property. Deposits for these properties need to be paid in advance before the tenant moves into their new home, which in most cases, is before their previous deposit is released back to them.
Most letting agents and landlords take a deposit equivalent to five-weeks rent (to protect themselves from damage to the property or unpaid rent) from the start of the new tenancy. Couple this with growing rent costs, tenants need to save more and more to cover the size of their deposits.
But, with the lifetime deposit, a tenant doesn't have to worry about forking out additional cash for a new deposit before their old one has been returned, as it would be transferred from one landlord to the next.
This can also be referred to as "deposit passporting".
The National Residential Landlords Association (NRLA) commented on the proposed Lifetime deposit scheme, stating:
It is vital that the new system in no way discourages 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.
Ben Beadle, chief executive of trade body the NRLA, says lifetime deposits for tenants provide an opportunity to reduce the upfront cost of renting but adds that 'they need to work for all concerned'.
How can Fronted help?
At Fronted we aim to help renters afford rent deposits when they move. These deposits can often reach thousands of pounds, which is where the Fronted deposit comes in.
Our deposit solution lets renters spread the cost of a deposit while the estate agent or landlord don't need to alter their workflows in any way.
With a Fronted deposit, you can pay your deposit monthly whilst keeping all the benefits of a cash deposit. A Fronted deposit spreads the cost of your deposit over 12 months, plus a little interest so you can get on with moving.
Fronted was built to fit into the current system of deposits and offer value to renters. Because Fronted pays the deposit directly to agents and landlords in cash, the money is still protected in their preferred scheme.
Read more on how Fronted works here.
A question for you...
What are your thoughts on the Lifetime deposit scheme? Let us know with a Tweet @getfronted.