Hike in security deposits on rental property
Sir, – I was not surprised to read that security deposits are now being increased to the equivalent of two months’ rent, rather than the traditional one month’s rent (Tenants face two months’ rent deposits after move by leading private landlord, Laura Slattery, July 24th)
This is an entirely predictable development for several reasons.
First, even at the two-month level, the security deposit is proportionately small, representing less than one per cent of the value of the property being rented. Nothing else can be rented with so small a security deposit.
Second, charging a higher deposit will exclude most lower-income, rent-subsidised tenants from applying for a property, thus countering the Government initiative preventing landlords from discriminating against lower-income tenants. This demonstrates that Government interference in the market is counter-productive.
After the increase in deposit, I foresee that the next step in providing security for landlords will be that every landlord will insist on the tenant having a financial guarantor to pay the landlord in the case of non-payment of rent.
It makes sense that, if none of a prospective tenant’s family and friends are prepared to guarantee his rent payments, the landlord should not rent the property to him. Indeed it is surprising that landlords are not already implementing this in all rental contracts. – Yours, etc,