As the housing market spins into a frenzy with even more landlords jumping on the buy to let ladder to beat the 3% stamp duty hike on the 1st of April, our research reveals a shocking level of bad practice in this sector.
With the help of the Centre for Economics and Business Research, we have looked into an ever-contentious issue between landlords and tenants - rental deposits.
As soon as a landlord receives all or part of a rental deposit they have 30 days to protect it in a government-backed tenancy deposit scheme (14 days in Northern Ireland).
The landlord also needs to provide written confirmation of where the deposit is protected, their own contact details and the contact details of their letting agent if they have one. This applies to almost every landlord that rents property on an assured shorthold tenancy basis in the UK.
Approximately one in five (4.6 million) households in the UK are privately rented. We've researched the habits of 1.9 million landlords and found that one in seven are still not complying with the rules. This leaves a large number of renters vulnerable with no independent adjudicator or third party protection if they dispute their landlord's decision to withhold some or all of their deposit when they move out.
Renting can be a money minefield and with difficult times ahead for the buy to let market, the problems caused by landlords behaving badly are likely to get worse. While many landlords are doing the right thing and protecting deposits in one of the official government backed schemes it's worrying that hundreds of thousands of deposits are still not properly protected, leaving tenants' money exposed.
Rics are predicting that rents could rise by 5% each year for the next five years. This means new deposits will get heftier, leaving tenants' more susceptible to losing out big time when they move out if their landlord hasn't protected their money.
What should tenants do?
If you're moving into a new place, ask your landlord which protection scheme your money will be put in before you hand over your money. Landlords don't have to protect holding deposits, unless your holding deposit becomes your official tenancy deposit.
To reduce the risk of losing any of your deposit when you move out, take a careful inventory on arrival. Be thorough and feed any issues back to the landlord or agency promptly so they're on file as proof they were there before you moved in. Don't be afraid to take photographs and video as a backup and share them with your landlord and letting agent before you move in.
If you've been renting the same property for a while and don't know whether your deposit is protected, make sure you ask your landlord and get copies of the relevant paperwork.
How can I check my deposit is safe?
If your landlord has told you where your deposit is protected you can double check it's covered by visiting the relevant deposit scheme's website or, if you live in England or Wales, use the search on Shelter's website.
What should I do if my deposit hasn't been protected?
If your landlord hasn't protected your money then you are completely within your rights to ask them to do so. Explain that it's a legal requirement and doesn't have to cost them a penny and they'll most likely oblige. This guide explains how best to approach this.
If, however, they refuse the next step is to take them to court where they could be fined up to three times the value of the deposit. This guide explains how to set the wheels in motion - it's comparatively simple and well worth doing if your landlord isn't playing ball.
Does it really matter?
Tenants need to be legally and financially protected from landlords behaving badly and vice versa. Some landlords do not ask for a deposit, which isn't breaking the rules, however I can't understand why a landlord would choose to go down this route. It doesn't have to cost anything to place money with a tenancy deposit scheme and could save so much hassle later on.
By having a third person to step in to resolve any disputes, in theory disagreements will get resolved quicker and both parties should be left more satisfied with the outcome.
Ultimately the responsibility to take landlords to court if they do not put a deposit in a scheme lies with the tenant which seems really unfair to me. The government should step in and take action, rather than leaving tenants to deal with by themselves.
Introducing a register listing for landlords that let properties in England and Wales would be a start. This has worked for Scotland and Northern Ireland and students at Leeds University have started their own website which rates landlords in an attempt to combat problems.
By leaving reviews for landlords on a website you have the beginnings of a solution that give renters an informed decision about who they are paying their hard earned cash to. It would certainly put off landlords from doing anything that would damage their reputation. There's no reason the same couldn't be set up for tenants too.