One of the great things about the Tenant Fees Act is that you can save money whether you move home or stay put.
Since June, tenants signing an agreement on a new home in England do not have to pay letting agent fees. (As of yesterday, the ban applies across the UK.)
But there's been less fanfare for the cap on deposits at five weeks' rent, which means that a tenant renewing the agreement on their current home could get a refund if their deposit is worth more than that.
Using data we obtained under the Freedom of Information Act, we have calculated that these one-off payments are worth £117.90 on average.
The average (mean) monthly rent in England in March 2019 was £858, according to the Valuation Office. The new maximum permitted tenancy deposit on this would be £990.
But, according to data from the three tenancy deposit protection schemes, released to us via the Ministry of Housing, the average (mean) deposit protected by the three approved protection schemes is £1,107.90 – a difference with the 5-week average of £117.90.
Most deposits are worth between 4 and 6 weeks’ rent so not all tenants will be entitled to a refund. Someone paying the average rent who paid a 6-week deposit would be in line for a £198 refund.
Many tenants may still be liable to pay a renewal fee if this is specified in their existing contract - the average renewal fee we found in our research is £117. But because it will cost your landlord to find a new tenant, you could try negotiating on this.*
More changes needed to make moving easier
Although the Tenant Fees Act has slashed the average cost of moving by £404, tenants must still find a new deposit before getting their existing one back - a challenge even with the 5-week cap.
That's why Generation Rent is calling on the government to free up more of tenants’ cash before they move to make the process less stressful. We want deposit passporting, where a portion of the tenant's deposit can be freed up once the final month's rent is paid to go towards the new home.
Making just two-thirds of the deposit available to passport would have a bigger impact on tenants' ability to move than the fees ban.
The government is already interested in deposit passporting and is seeking your views in a "call for evidence" that ends this Thursday. You can also tell them how you have experienced the deposit protection system - beyond basic affordability, we frequently hear about difficulties tenants have with challenging unfair deductions and landlords who simply fail to hand their money back.
The Freedom of Information release for the financial year ending 31 March also revealed:
- 3.98m tenants’ deposits are protected by the three approved schemes
- Tenants’ deposits are worth £4.41bn - which we estimate would drop to £3.94bn if all tenants get the refunds they're owed
- Assuming an interest rate of 2% on deposits held long term, tenants' cash is worth £78.8m per year - imagine what we could use that for! READ MORE
- 1.72m new deposits were protected, while 1.62m were released when tenancies ended
- There were 35,205 adjudications, 2.2% of all deposits returned
- If you want to renew, check how much deposit you paid originally and if you are owed any back - see p40 of the government's Tenant Fees Act guidance
- Respond to the government's call for evidence by 11.45pm on Thursday 5 September
- Sign the petition to make deposits more affordable
*EDIT: tweeter @rentrebel rightly points out that if you are due a refund on a deposit of more than five weeks' rent, any Section 21 (no-fault) eviction notice is invalid.
[#England only] Don't forget: If you're owed a refund on renewal and it hasn't come back to you then any #Section21 is invalid until and unless it's returned. Likewise, if your #TenancyDeposit was not protected in one of the 3 deposit schemes: s21 invalid https://t.co/BdlpZGMbeS— Rent Rebel (@rentrebel) September 2, 2019