Deposits - What the Private Landlords Survey Tells Us

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I have just been reading in detail the Private Landlords Survey (2010) published by the Department of Communities and Local Government. This is a survey of landlords and lettings agents who own and/or manage privately rented properties in England.  Its aim is to provide a snap-shot of the composition and experience of landlords and how they (together with any agent) acquire, let, manage and maintain privately rented accommodation.  It follows similar surveys carried out in 2001, 2003 and 2006.  The sample size was 1,051 landlords and agents, each of whom had a face to face interview.  

As Chief Executive of the Tenancy Deposit Scheme I was keen to see what the survey tells us about the approach to deposits taken by landlords and agents.

Taking deposits remains very popular

The survey reports that most landlords continue to take deposits - with 91% of landlords/agents requiring a deposit from their tenants.  This shows that taking deposits is still seen as a necessary action to safeguard the landlord’s interest and that other alternatives, such as insurance policies or not taking a deposit at all, are not really growing in popularity.

Inventories: still room for improvement?


A key issue in the adjudications that we undertake is that landlords are unable to justify the deductions that they wish to make from the deposits.  We have said, constantly, that having an inventory and check in and check out reports are really important to provide the evidence for any deposit deduction.  In the absence of these it is always going to be difficult for landlords to prove their claim to an adjudicator.  

With that in mind, it was really surprising that, whilst 85% of agents provided a detailed inventory, individual landlords supplied an inventory in only 58% of tenancies.  While we do not say, in spite of continual pressure from professional inventory companies, that the inventory has to be professionally prepared, we do say that the inventory must be comprehensive and a clear record of the property’s condition and backed up by a check in and check out report.  The absence of these will severely jeopardise the landlord’s prospects of making a successful claim for a deposit deduction.

Clearly from the Private Landlord Survey there is still some way to go to persuade landlords of the merits of inventories and getting them to understand that not providing one can be a false economy if the tenancy ends in a dispute.

Deposit values in line with our experience


The report suggests that the deposit value was either equal to four weeks rent (51% of cases) or higher (in 39% of cases).  Only in 9% of cases was the deposit less that 4 weeks rent.  This tends to reflect our experience at TDS where the equivalent of four to six weeks rent tends to be the average deposit taken.

Tenancy Deposit Protection schemes; why are landlords still not protecting deposits?

The survey asked landlords and agents about the statutory tenancy deposit protection schemes and pleasingly a large majority of all landlords/agents (84%) were aware of the authorised deposit schemes.  However just over two-thirds (67%) of individual landlords were aware of the scheme, with 17% deciding not to use it. A staggering 33% of landlords were however not aware of the scheme at all.  This compares with 93% of agents using the scheme, with 6% aware of it but not using it and with only 1% saying that they were unaware of the scheme.

Whilst the numbers are pleasing in terms of overall awareness of the Scheme, it does suggest that there remains a high level of ignorance about the existence of the scheme in a significant proportion of landlords and potentially therefore a level of non-compliance with the legislation.

Indeed of the 61% of landlords who said they did not use the or were unaware of the scheme the reasons given were that the tenancy was pre 2007 (21%) and 37% said they did not take a deposits.  But 30% gave unspecified “other” reasons.  I do wish the survey had probed somewhat more about what these “unspecified” reasons really were.  In spite of the penalties involved in not protecting deposits (of up to three times the deposit) this level of non-compliance is worrying and should give us all pause for thought.

Next steps?

For me the key issue highlighted in the survey is the lack of understanding by Landlords about the existence of tenancy deposit schemes.  Those of us involved in this do need to think through what more we could do to promote awareness of the scheme with landlords and tenants.  What more could government do to promote awareness of tenancy deposit protection in general?  What role for the various landlord and agents bodies?  What should Shelter and the National Union of Students be doing?  What about a more joined up approach?  

Any takers for a joined up campaign?

 

 


Posted by Steve Harriott on 23 November 2011

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