The housing industry has called on the government to embrace new tech solutions to rental deposits.
These calls come as renters are struggling with unaffordable upfront payments.
Some recommendations from the industry include offering tax incentives to landlords who opt for alternative deposit solutions, and mandating the use of a central clearing system to manage all tenancy agreement transactions.
Recent research by Which? found that 43% of tenants that were planning to move to a new rental property had to use a credit card, loan, overdraft, or borrow cash from friends and family to pay for a deposit on their new home.
The study also found that 16% of tenants who had moved out of a rental property in the past two years had to wait more than four weeks to get their deposit back, leaving a third to pay a new deposit before they had received their previous one back.
The British Property Federation said in its written submission to the review that “fundamentally, landlords do not want to retain deposits and anything that helps landlords and tenants to work together to enable as much of the deposit to be returned to the tenant must be a positive move for both parties”.
ARLA Propertymark added in its written submission that “tenants find it difficult affording a second deposit when moving within the private rented sector”.
On the subject of increased legislation however, their advice was that “the government must recognise that investment in the private rented sector is falling and this is a direct result of increasing levels of legislation that is putting even more pressure on the industry”.
Franz Doerr, co-founder and chief executive of flatfair, said: “The growing demand for deposit replacement services in the UK shows that a more equitable solution that affords landlords enhanced protection, while saving tenants money, is possible.
“Instead of diverting resources into solutions that perpetuate the existing tenancy deposit model, government should promote the adoption of alternative tenancy deposit initiatives by incentivising landlords who opt for alternative deposit solutions introducing clearing platforms for financial transactions.”