Some 98% of tenants are not fully aware of the correct rights of the tenancy deposit law, according to a recent study by Kin Communications.
As part of the Housing Act 2004, landlords in England and Wales are legally required to protect deposits in a government-approved scheme and, if they don’t, they could be liable to pay the tenant up to three times the amount of the original deposit plus the deposit amount.
The survey of over 1,000 Britons revealed a 'staggering' lack of knowledge of this concept, with only 2% of respondents aware of how much of the original deposit the tenant can claim if they want to leave the property.
Of those aged 55+, 70% believed the maximum amount available to a renter was the full amount plus deposit. A lack of tenant awareness regarding their rights could increase the chances of rogue landlords exploiting this knowledge gap.
On the other hand, if landlords are also not aware of the law, they could face large fines and hefty pay-outs to their tenants.
The research asked respondents to identify where a tenant’s deposit should be kept during the duration of the tenancy. Two thirds (66%) could not state the correct answer, and amongst those aged 18-24, the number of correct responses fell to 16%.
What’s more, 8% thought the deposit was held in the landlord’s personal bank account and almost a quarter (24%) believed the letting agent looked after it.
Kin Communications said these findings ring major alarm bells, as 65% of those aged between 16-24 live in rented accommodation and could potentially miss out on money they are legally entitled to.
The survey also looked at whether or not attitudes to consumer rights in these tenants had changed following the PPI scandal of recent years and whether or not Brits are more likely to look into what proper process should be followed.
Some 37% said it had not made any change in their attitude towards their consumer rights and 74% of those asked said the PPI scandal hadn’t changed their awareness when it came to reading the terms and conditions of a signed agreement.
“It’s shocking that so few people understand their rights when it comes to tenancy deposits, especially as more people than ever rent from a private landlord,” said Rose Jinks, the spokesperson for buy-to-let insurance firm Just Landlords.
“We believe that the companies currently seeking PPI compensation for consumers may turn to unclaimed tenancy deposits when the deadline comes into force in August next year.”
She said that tenants may find that they could claim back three times their deposit, plus the original deposit amount, if their landlord didn’t comply with the law, while landlords could be faced with a significant bill.
She concluded: “We urge all of those in the private rental sector to understand their rights and responsibilities surrounding tenancy deposits.”