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How will the proposed deposit changes affect landlords?

Tags: london / Landlords / deposits / NLA / news

18 October 2017 15:35

The government’s plan to introduce a cap on the damage deposits paid by tenants on rented properties was announced in the Queen’s speech back in June. The first draft of the bill proposed that holding deposits should be capped at no more than one week’s rent and security deposits at no more than one month’s rent.

The National Landlord Association has estimated that around 40% of security deposits around the UK currently exceed the cap and the worry is that it could lead to an increase in formal deposit disputes as landlords are left with less money to cover damages.

To discover more about how these deposit changes will affect landlords in and around London, we sat down with our Director of Operations, Marti Kollar.

How does LiFE Residential currently handle deposits and any disputes that happen?

"Currently, LiFE is registered with mydeposits, a scheme which offers deposit protection. Legally, we must protect our tenant’s deposits through a government scheme and mydeposits have the experience that allows us to rely on them for all our tenants. The scheme also offers a free, independent resolution service, this allows a non-biased dispute handling process if there is ever any dispute with a tenant."

What does the deposit cap mean for landlords around London?

"The decision to cap tenancy deposits is another attack on landlords. Their budgets are already being squeezed due to Buy-to-Let changes such as the reduction of tax relief and high Stamp Duty rates. There is a feeling amongst the landlord community that it may be tenants who will ultimately suffer because of this legislation."

Staff photo of Marti Kollar, Director of Operations at LiFE

How can landlords manage riskier tenants once the cap is implemented?

"Further to the deposit cap being introduced many landlords are saying it will reduce their appetite to accept higher risk tenants and tenants who own pets.

For our clients, we offer services such as contents and rent protection cover which can give them the peace of mind they deserve. It also means they wouldn’t have to rely on the deposit solely to cover damages and rent arrears.

However, if the cap is introduced in its current form, then it could get much harder for those considered a higher risk to rent property with only 1 month’s rent as a security deposit."

Does the introduction of these deposit caps prove that the Government are out of step with landlords?

"Landlords have faced some tough new rules in recent years, and the latest announcement by the government is unlikely to make things easier. For most tenants and landlords, the system is already working, so introducing tenancy deposit caps simply doesn’t make any sense."

What do LiFE think of the proposed gap?

"While placing a cap on deposits is better than an outright ban, 1 month’s rent for a deposit is too low. While it is unfair to take unreasonably high deposits, I personally think the cap would be more acceptable at no less than two month’s rent.

By simply not paying the last month’s rent tenants will have no incentive to leave the property professionally cleaned, take responsibility for damages and return the keys.

Luckily, our referencing process is thorough and therefore we’ve had a very low percentage of tenants who refused to pay or refused to take care of the property."


We specialise in managing luxurious properties all around London on your behalf, to remove the stress that being a landlord can bring. Therefore, our knowledge of the legislature changes affecting landlords is second to none.

If the proposed laws around deposits is concerning you, call us today on +44 (0)20 8896 9990 and we’ll explain how our property management can take the pressure off you and keep your tenants happy.