'Broken' deposit system pushing tenants into debt, says consumer group

One in six renters wait more than four weeks to get deposit back

Government maintains the current system ‘works well’ but says it has set up a working group to see if it could be improved (PA)

The UK’s housing deposit system is “broken”, causing 43 per cent of renters to take on debt as they wait for landlords to return money and respond to challenges to deductions, according to Which?.

The consumer group found that more than half of tenants who did not get their money back challenged the decision and 31 per cent had to pay a new security deposit before having their previous one returned.

One in six tenants who had moved out of a rented property in the last two years waited more than four weeks to get their deposit back.

The watchdog found that 43 per cent of renters who faced moving costs turned to a credit card, loan or overdraft, or borrowed money from family and friends, to cover the expense.

The most common reason to be charged money by a landlord at the end of a tenancy was cleaning, cited by half of those who faced deductions. Eight in 10 of those people thought the charge was unreasonable. A tenth of respondents said they were given no reason for why deductions were made and only 33 per cent of tenants who raised a dispute said they were satisfied with the deposit scheme.

Which? called on the government to open up a review of the three approved deposit adjudication schemes.

The consumer group recommends making all landlords register with local authorities, with information logged on a publicly available database and linked to the existing register of rogue landlords and agents established in April 2018.

It is also calling for the creation of an independent regulator for lettings and management agents with a mandatory, legally binding code of practice and strong penalties for rogue operators.

Alex Neill, Which? managing director of home products and services, said: “The number of people going into debt to cover the cost of a new deposit is concerning, particularly when you consider that many are forced to wait a significant time to get their previous one back, and could then face deductions that they don’t think are reasonable.

“The findings highlight how the deposit system is crying out for reform so that it is fit for purpose for the record numbers of people who are living in rented accommodation.

“We believe that the government must tackle the issues that we have identified in our report head on to ensure that the rental market delivers for consumers.”

A Ministry of Housing, Communities and Local Government spokesperson said: “We are determined to help the millions of renters in this country by banning unfair letting fees and capping tenancy deposits.

“The new measures in our Tenant Fees Bill will save renters around £240m a year.

“The current tenancy deposit scheme works well but we have recently set up a working group to see if the system could be improved.”