28 May The New Deposit Cap for Tenants
You may remember a couple of months ago we reported on the Tenant Fee Ban which is due to start next month (June 2019). Well, the time has come and many agents are starting to feel the pinch of the ban. At Barton Wyatt we have always kept our fees extremely low on our properties to let in Virginia Water so it won’t be affecting us.
The Act only applies to new assured shorthold tenancies and renewals and means that lettings agents will no longer be able to charge the various admin fees they may have done before and has capped tenancy deposits to five weeks in most cases (six weeks for rents over £50,000 a year).
In the past there has been no official line on tenancy deposits, only a common, informal standard which could fluctuate between one and three month’s equivalent rent. As of June 1st this will no longer be the case, with most deposits being capped at five weeks.
If you would like to roughly calculate what your five week deposit will be, simply multiply the monthly rent by 12 (months), divide that number by 52 (weeks of the year) and multiply that number by five (weeks); the result will be an estimate of your required deposit.
We are yet to see whether the ban will result in increased rental prices to cater for other fees but what it does mean is that we’re likely to see the demand for rental properties increase as renting becomes more a more affordable option.
While renters will still need to find a significant figure for their deposit, it is still less than what has been previously researched. This means that those who were priced out of the market in houses which are no longer suitable for them can move with less financial strain.
More Movement and Investment
The national demand for rental accommodation is very obvious and so, this new law is likely to provide a few opportunities.
The market is in need of new lettings properties. However, the legislation on tax relief for landlords has meant that people have been put off investing in rental properties. This is a challenge.
The new tenant fee ban, will mean cost of moving will reduce and so, we are likely to see more people moving from rental property to rental property more often.
This will further increase the demand for properties – which will make investing a more attractive option – bringing more properties and new investors to the market.
Get in Touch
We market dozens of properties to let in Wentworth Estate and the surrounding area every year, and so if you are thinking of moving to the area or simply browsing our properties to let in Virginia Water, make sure you get in touch with us and speak with a member of our expert staff. You can call us on 01344 843000 or email us. You can also follow us on Facebook, Twitter, Instagram and LinkedIn.