Rent Deposit Alternatives – Tax Perks
One of the leading providers of rent deposit alternatives in the UK wants the government to embrace the option – even to the point of giving landlords who use it tax incentives.
flatfair, which boasts many lettings agencies amongst its customers, says in a response to the government’s call for evidence on tenancy deposit reform, that there is clear and growing demand for rent deposit alternatives.
It says a random sample of nearly 15,000 lets showed that uptake in rent deposit alternatives has risen from 10 per cent to 33 percent in the last year alone.
Franz Doerr, co-founder and chief executive of flatfair, says: “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 incentivizing landlords who opt for alternative deposit solutions introducing clearing platforms for financial transactions.”
He says his company is just one of many organisations in the industry that wants government to seek more innovative solutions to the deposit issue, which he claims deters more mobility within the lettings sector.
Also responding to the call for evidence, the British Property Federation says: “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.”
The trade association did see some signs of progress however, adding that “parts of the industry are already ahead of the curve in terms of new deposit initiatives.”
And flatfair cites ARLA Propertymark telling government: “Tenants find it difficult affording a second deposit when moving within the private rented sector.”
Flatfair says over £4 billion is locked up in deposits across England and Wales. Key things it wants the government to do include:
– Offer tax incentives to landlords who opt for alternative deposit solutions;
– Mandate the use of a central clearing system to manage all tenancy agreement transactions; and
– Introduce an independent adjudicator who will preside over disputes between tenants and landlords.