It’s an expensive business to move house, particularly for tenants who need to find a month’s rent in advance plus a deposit which could more than double their outgoings. The deposit scheme was set up to improve standards and to encourage landlords to keep on investing in the buy-to-let sector because they had a financial cushion should tenants damage their property. However, as only about two or three per cent of tenancies end in a dispute, this seems unfair to penalise the 97-98 per cent who respect the property.
A better option is to use landlord insurance to protect against damage, theft or non-payment of rent. The costs could be shared as the monthly charges could simply be added to the rent. Although this could see rents increase slightly, this would be offset by the fact tenants no longer needed to find about £1,000-plus for a deposit. Larger landlords could also bulk-buy insurance for all their properties to cut costs. Already residential owner and rental management company Get Living does not now charge a deposit for tenants and is returning deposits to residents which will see about £3 million going back into the UK economy. The company knows the cost of living can be high and so is looking at ways it can reduce the burden on its residents, such as scrapping security deposits and returning deposits to current residents. Get Living hopes that others will follow its example, so that deposit-free renting becomes widespread. New residents have to provide references which pass scrutiny or have a guarantor in order to have the deposit waived.
A mandatory insurance scheme to replace the mandatory deposit scheme would also better reflect any risks borne by both tenants and landlords. Another scheme being mooted is for an insurance-based saving scheme which could help to turn tenants into home-owners. These funds, instead of being frozen as the deposits are, could be properly leveraged to invest in the government’s target of building 200,000 new homes every year to help ease the acute housing crisis.
This means that as well as having cover for buildings and contents, you can have extra protection for non-payment of rent, damage, loss of earnings and rehousing costs if the tenants have to move out because of fire or water damage, and accident liability. If you need to make a claim you will need to show documentary and/or photographic evidence to back it up. This is another reason why keeping detailed inventories is vital. The inventory and schedule of condition must have detailed descriptions of everything in the property and photographs. The tenant needs to agree with the inventory report during check-in and sign it. Then if there is a dispute, the landlord will have the signed inventory plus photographic evidence to show the difference between the condition of the property or item at check-in and check-out. Records also need to be shown of any receipts, invoices, estimates, quotes if repairs are needed and cleaning costs.