The Mayor of London is calling from more to be done to support tenants, especially those on lower incomes, with the cost of deposits and other upfront finances.
Sadiq Khan has accused Ministers of watering down plans to cap deposits after the draft bill on the letting fees ban in England proposed that it should be six weeks despite pledging to make it four weeks in the Queen’s speech earlier this year.
Khan had called for it to be three weeks and this was backed by organisations such as Citizens Advice, Shelter and Crisis but lettings agents and estate agents supported a six week cap.
Khan argues that London has higher rents and a high number of lower income renters who need to be supported. He claims that tenants face up-front costs of about £2,000, double the £1,000 deposit cap he proposed and £500 more than the government said it would do.
The Mayor has also proposed a cap on holding deposits, charges that cover the cost of references or losses in rent if a new tenant needs to be found which he said should be set at one day’s rent of around £50.
However, the Government now says a holding deposit will be allowed to go as high as a whole week’s rent, which would work out in London at around £340.
The Mayor criticised the Government for not taking the opportunity to bring financial penalties for letting agents into line with those currently in place for landlords. He argued they should be put on par with the £30,000 fines councils can use to punish rogue landlords for breaching housing legislation.
Instead the Government has set the initial fine for breaking the law at only £5,000, which the Mayor believes is far too low and has proven to be wholly ineffective for similar offences.
‘While I welcome the fact lettings agent fees paid by tenants look set to be finally banned, something I and others have called for over many years, the caps on deposits and holding deposits are almost meaningless and will do nothing to make renting more affordable for Londoners,’ said Khan.
‘Instead the Government should cap deposits at three weeks’ rent as I argued, raise the penalty for charging illegal fees to £30,000 or a criminal prosecution, and give local authorities extra funding to enforce these new penalties,’ he added.