My Lords, Amendment 2 seeks to enable a deposit to be transferred to another landlord or letting agent. This deposit passporting would be of great benefit to tenants and, as far as I can see, would have no detrimental effect on landlords or letting agents. The system would allow for the direct transfer of money between landlords and properties. The consumer group Which? found that 43% of renters have had to use a credit card, loan or overdraft, or borrow from family and friends to fund a deposit—that is terrible. It also found that 31% of renters had to find money for a new deposit before they had been paid back their existing deposit. In effect, this group of renters would, even if only for a short time, have paid two deposits, which is potentially a huge sum of money. That is just not fair, and the Bill does not address this at all. Renting in the private rented sector is stacked against tenants in many respects and this proposal would help tenants with the difficult issue of finding deposits.
I saw an article in the Daily Telegraph—not my usual reading, I must say—which included figures from the Tenancy Deposit Scheme. The article found that the average deposit is £1,180, as much as £3,266 in parts of central London, and around £498 in Lancashire’s Ribble Valley. These are not insignificant sums of money. The system is failing tenants and it could be improved.
Amendments 15 and 16, also in my name and those of the noble Lord, Lord Shipley, and the noble Baroness, Lady Thornhill, seek to put into effect what the Government originally announced: that there would be a four-week tenancy deposit cap. In this case, I stand with the Prime Minister and what she announced last year. It is appalling that the Government have had a change of heart here, and it would be useful if the noble Lord, Lord Bourne, could explain what has happened over the past year and why there has been a change of heart. The evidence shows that opting for this large deposit cap makes it harder for people to rent in the private rented sector, and makes it harder for them to raise money for a deposit, especially when there is no ability to passport deposits.
I am sure we will be told that there is a risk that renters will use their deposit to cover their last month’s rent without the consent or knowledge of the landlord. Citizens Advice—an organisation that we all respect—has done research that found that this happened without prior agreement with the landlord in only 2% of cases. Therefore, in 98% of cases, it did not happen. I am sure we will also be told that this higher figure of a six-week cap is needed to recover landlords’ costs, but again this just does not hold water.
The Deposit Protection Scheme did some analysis and found that over 50% of tenants get their full deposit back and the average deposit return is 75%. That illustrates that the Government were right to set the level at four weeks in the first place, and it is disappointing that they have changed their mind. The majority of renters getting most or all of their deposit back shows me that the four-week limit is the right level, which would still allow for a much higher than average deduction to cover landlords’ legitimate costs while protecting renters from excessive up-front costs. I beg to move.