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Reluctant Landlords Fuel Surge In Risky Renting

Press release: 05/01/2009

Homeowners hoping to recoup some of their mortgage costs are fuelling a rise in risky renting, new research reveals.

The findings from home insurer LV= reveal a 56 per cent rise(1) in properties available to rent in the last three months, with the vast majority (86 per cent)(2) coming from homeowners choosing to let their properties rather than sell in a depressed financial climate.

But LV= is warning that these reluctant landlords are putting themselves and their tenants at risk, with the findings showing that just a third (27 per cent)(3) have signed up to a compulsory tenancy deposit scheme (TDS) designed to protect tenants and landlords from disputes over the lease. This is despite it being a legal requirement for landlords to ensure deposits are protected by the Government approved scheme.

Introduced in April 2007, the TDP scheme was set up to prevent legal disputes over deposits at the end of a tenancy. All rental properties where a deposit has been taken since April 2007 are legally covered by the scheme.

The high numbers of landlords not signing up means thousands of tenants and landlords could run into trouble at the end of a tenancy. The findings show that over three-quarters of renters (77 per cent) say they have previously had some or all of their deposit money unreasonably withheld, while one in seven (13 per cent) tenants have refused to pay rent towards their end of their contract.

And with the research showing that one in five (20 per cent)(4) tenancies end in dispute, LV= is today warning tenants and landlords to take the correct precautions, and ensure they have legal protection cover included in their policy.

John O'Roarke, Managing Director of LV= Home Insurance, said:

"This research highlights the numbers of new landlords entering the market, many of whom may not be aware of their legal obligations. It also illustrates the need for the Government to raise the profile of legislation such as the Tenancy Deposit Scheme and for these to be more strictly enforced, to protect both renters and landlords, as awareness is currently very low. Although the majority of private landlords are undoubtedly honest, our research shows that many tenants have experienced problems getting their deposit money back in the past, and are worried this could happen again.

"The average deposit is over £500, which is a significant amount of money, so renters and landlords need to make sure they know their rights. Renters should also always ensure they have home contents insurance in place, as they more likely to be burgled than home owners and some polices will include a legal advice helpline, which could be used in the event of a contractual dispute."

All research unless otherwise stated was carried out on behalf of LV= by YouGov. A nationally representative sample of 1,193 private renters were questioned online between 22nd to 25th July 2008. Results are weighted to be representative of the UK adult population. YouGov is a member of the British Polling Council.

  1. RCIS residential lettings survey October 2008

  2. See above

  3. 27 per cent of renters say their landlord is not signed up to the scheme

  4. 20 per cent of tenants say the end of a tenancy led to a legal dispute with the landlord

About Tenancy Deposit Protection

Under the TDP scheme, landlords must sign up with one of two schemes run by three Government approved financial companies. In the 'custodial scheme', the landlord pays the deposit to the scheme for safekeeping, and in the event of a dispute independent adjudication will decide who receives the deposit money.

In the 'insurance scheme' the landlord retains the deposit and pays a premium to an insurer, who will return the money to the tenant if the landlord does not comply with the adjudicated outcome of any dispute. With both schemes, landlords have 14 days from the date the deposit is taken to inform their tenant of the scheme details.