Government publishes deposit scheme paper ahead of fees ban Report Stage

The House of Commons has published a briefing paper on tenancy deposit schemes ahead of the Report Stage of the Tenant Fees Bill on Wednesday.

The paper, authored by Wendy Wilson, covers the history of tenancy deposit protection as well as ongoing issues and comments surrounding the current framework.

It suggests that the main issues with the existing system are non-compliance and lack of enforcement, loopholes and abuses for the insurance-based system as well as the high cost of deposits for tenants.

Consumer group Which? recently called for the deposit system to be reformed, describing it as 'broken'. The organisation said one of the main issues is tenants moving between properties having to pay a new deposit before their previous one is returned. It also criticised the deposit adjudication service.

The government paper also includes a section on the Tenant Fees Bill 2017-19 and more specifically the proposals to cap security deposits in England.

It discusses the government's decision to reject a Select Committee suggestion that the planned six-week cap is lowered to five weeks. This is to make sure that landlords are still offered 'financial security for their assets' while providing tenants with 'greater affordability benefits'.

The paper then goes on to cover Labour MP Sarah Jones' amendment in the Public Bill Committee which suggested reducing the deposit cap to three weeks' rent. The amendment was defeated in a vote and it was concluded that reducing the cap to three weeks could 'distort the market and lead to behavioural change'.

The Tenant Fees Bill returns to Parliament tomorrow as it passes through the Report Stage and Third Reading. The ban on fees and caps on security and holding deposits are expected to become law by spring 2019 'at the earliest'.

You can read the House of Commons briefing paper on tenancy deposit protection here.