The tenant deposit scheme is causing controversy because it is seen as unfair to tenants, who have to pay a large lump sum when they move into a new property. This could be a double whammy, as they may not have had their previous deposit returned before having to fork out again. It could also put people off from either moving or registering with a legitimate agency or landlord, because they cannot afford the deposit. Landlords and economists are also against the scheme, because the money is tied up in accounts, rather than being used in the economy. If the money was in the tenants’ hands, they could spend it or save it. There is also an argument for releasing this money, to give a much-needed cash injection into building houses and helping to ease the crisis.
One idea being put forward is to replace the deposit scheme with no-deposit insurance schemes. However, Eddie Hooker, chief executive of Hamilton Fraser, which owns mydeposits, has raised a few questions about the alternative method. The Tenancy Deposit Protection scheme holds more than four million individual deposits, with disputes falling to less than two per cent when a tenancy is ended. Hooker claims that more than 40% of deposits are returned with an agreed deduction. If these deposit schemes were replaced by insurance, then it means at least 40% of landlords will need to make a claim on their policy to cover costs. This could increase the premiums to cover the cost of processing and making the claim. It could also mean that the insurance companies then try to claim the money back from the tenants, which could lead to court judgements and blacklists.
A new service to make it easier to make deposits is The Depositary, being set up by Kristjan Byfield of Base Property Specialists. This service will help agents and landlords by automating the process of administering deposits. The Depositary has gone into partnership with the largest deposit protection scheme, so it would be easy for an agent to join.
Despite these misgivings, insurance schemes are seen as simpler and more efficient for landlords and tenants alike. Tenants could pay the equivalent of one week’s rent to purchase insurance for the landlord, instead of handing over a deposit of between four to eight weeks’ rent. This seems a simpler solution which benefits both parties. The landlord is covered in the same way as under the tenant deposit schemes, while the tenant does not have a lot of money tied up in deposits. Inventory reports can help these insurance schemes, because they will contain all the necessary information if a claim has to be made. The inventory reports will have a list of all fixtures, fittings, furnishings and other household items, as well as their condition when the tenant moved in. Photos and videos can be included in the reports to back this up. These are then signed by the tenant. Then, at the time of check-out, these can be used to show any damage, over and above the usual wear and tear, or missing items.
InventoryBase provides the perfect solution for managing lettings – from check in reports, to full inventories – we’ve got it covered. Reports can be created offline and include integrated images, providing accurate reporting across all aspects of the property.
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