Name of Proposer:
Matthias De Ruyver
Should LUU lobby landlords to remove holding deposits?
What the Idea is about:
LUU should lobby landlords and letting agents to end the use of holding deposits and retention charges. Holding deposits and retention charges are used to reserve the property and take it off the market while the landlord or letting agent prepares the contract, checks references and conducts a credit check. A holding deposit is different to a tenancy or a security deposit (commonly known just as a deposit), and it is not secured by the tenancy deposit scheme. Instead of a holding deposit or retention charge, landlords should use the upfront payment of a tenancy deposit and any rent in advance as assurance of the tenant’s commitment to renting the property.
Why have you proposed it?
Some students are being asked to pay a substantial amount of money upfront through a combination of letting fees, a tenancy deposit, a holding deposit/fee and rent in advance. Housing and homelessness charity, Shelter, “believes costs to the renter should be concentrated on the protected tenancy deposit and payment of rent in advance”. More worryingly, the NUS ‘Homes for fit study’ report (2014) showed that almost a quarter of students had been asked to pay a holding deposit before seeing a copy of the proposed contract. Such students can feel under more pressure to sign as they could lose the money they have paid. Sometimes this can be as high as £100 per tenant. As holding deposits are not protected through the tenancy deposit scheme, they can be more difficult to recover should a dispute arise.