Private landlords to lose control over tenants’ deposits

Press release: 23 January 2006

Private landlords to ose control over tenants’ deposits
Comment available from leading independent buy-to-let mortgage broker Mortgages for Business.

Landlords will no longer be able to keep tenants’ deposits following legislation pushed through by the deputy Prime Minister, John Prescott.

The changes added to the 2004 Housing Act in its final stages are likely to catch many landlords by surprise and will burden landlords with additional costs and bureaucracy, which according to David Whittaker, managing director at Mortgages for Business, will be passed on to tenants.

The legislation proposes that all tenants’ deposits from 1 October will be paid to a government appointed private company.  Landlords who do not comply may face being barred from their property, a fine of up to three times the value of the deposit and the loss of the right to evict tenants until any dispute has been resolved.

David Whittaker says: “The last 12 months have seen a raft of legislation that ignores the interests of private landlords.  We have seen an increase in Housing Authority pathfinder projects – whereby the government now pays DSS tenants’ rents directly to the tenant rather than the landlord – and the changes in law relating to HMOs.  Landlords could be forgiven for feeling an easy target by an ever-more nannying state.”

The new law will not protect landlords whose tenants withhold their final month’s rent often leaving landlords out of pocket on repairs.  The company running the deposit scheme will not be allowed to hand the money back to the landlord, who must instead go to the courts to recover any loss.

“We will expect to see a rush of landlords trying to secure tenants in advance of October to avoid having to comply with the new rules,” adds Whittaker.  “It is also possible that we will see an increase in unfurnished lets with smaller deposits and where the potential for damage is reduced.”

Landlords who let to student tenants are the most likely to be hit hardest as all deposit disputes will be referred to an arbitration panel, which could result in inspectors visiting properties to assess damage – which can be taken from a tenants’ deposit - and reasonable wear and tear, which can’t.

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Notes for Editors
Mortgages for Business are independent experts in buy-to-let and commercial mortgages managing single and multi-let property portfolios for thousands of UK investors.  Its brokers have access to a large portfolio of fixed and variable interest rate mortgages from a panel of over 30 lenders and offer truly independent advice that is appropriate to investors.

For further information contact:
Matt Baldwin, Coast Communications
Tel: 01233 721597 or 07930 439739

Jonathan Moore, Mortgages for Business
Tel: 01732 471619