Do you think rental deposits are too high in the UK ?

Do you think rental deposits are too high in the UK ?

Well,  in comparison to the rest of the world UK tenants are not that hard done by, in the UK a tenant currently pays an average of £811.

The tenant fees ban means that agents and landlords can now only charge five weeks’ rent as a deposit in most circumstances.

Although you may consider that this is still high, tenants around the globe have a much higher charge.

In Japan, where 38 per cent of the population rent, tenants pay 10 months rent as a deposit, meaning an upfront cost of £6,145.

Like Japan, South Korea also requires tenants to pay 10 months’ rent as a deposit, costing £4,360 on average.

US tenants face paying as much as three and a half months’ rent upfront £3,547, with some states allowing agents and landlords to charge what they want with no statutory limit on deposit size.

 

Further deposit details from other countries below -

Japan, 10 months’ rent: £6,145;

Denmark, three months’ rent and three month deposit: £4,432;

South Korea, 10 months’ rent: £4,360;

United States, up to 3.5 months’ rent: £3,547;

Switzerland, up to three months’ rent: £3,524

Germany, three months’ rent: £1,860;

Austria, three months’ rent: £1,839;

Israel, two months’ rent: £1,598;

Canada, two months’ rent: £1,488;

Australia, six weeks’ rent: £1,269;

France, two months’ rent: £1,146;

UK, five weeks’ rent: £811;

New Zealand, up to four weeks’ rent: £743;

Turkey, up to three months’ rent: £527;

Sweden, usually no deposit.

What is a deposit and why is it so important ?

A deposit is an amount of money taken from the tenant as security for unpaid rent, damages or unsatisfactory cleaning at the end of the tenancy.  A landlord can make reasonable deductions from a deposit but they must be proportionate, written in the tenancy agreement as reasonable deductions and supported by an inventory in order to make a successful claim.

A landlord or its agent must also register the deposit with one of three approved deposit schemes: TDS, DPS or My Deposits. Deposits must be registered within 30 days of receiving the payment, not from the start date of the tenancy. The Landlord/Agent must also give a copy of the deposit certificate to tenants within 30 days.  The tenant must also be served  the Prescribed Information to tenants within 30 days. This gives details of the scheme being used and how the deposit will be released at the end of the tenancy to the tenants.

An unprotected deposit is a breach of the law, if a tenant finds out their deposit isn’t protected they can request it be returned- leaving landlords open to no financial protection for unpaid rent/ damages etc. A tenant can take a landlord (or agent, depending on who is responsible for registering it) to court and the judge can award a penalty (which goes to the tenant) between 1 and 3 times the deposit amount.  The above applies for late protection of a deposit, although a judge may be more lenient when it comes to inexperienced landlords.

A Section 21 eviction notice cannot be served if the deposit isn’t protected. Also note, if the deposit is protected late then it must be returned in full to regain the right to serve a Section 21 notice.

If you require any advice on tenancy agreements or deposit regulations do not hesitate to contact either Charlotte Dyer or Kerry Cook 01227 767200.

 

 

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