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Tenancy deposits in NI higher than earlier estimates

Tuesday 28th May 2013

Tenants in Northern Ireland are paying higher deposits than previously estimated, at an average £558 per tenancy, according to fresh data released by the Tenancy Deposit Scheme Northern Ireland.

Previous research by the Northern Ireland Housing Executive estimated a far lower value of £294 per tenancy. These new figures come from the scheme’s first month in operation and are the first hard data on deposit values to be made available.

It became a legal requirement for landlords to protect new deposits on private tenancies with an approved scheme from April 1st 2013. Landlords who fail to protect tenancy deposits within 14 days now face a fine of up to three times the value of the deposit from the district council, or up to £20,000 in court.

Chief Executive Steve Harriott said, “Initial statistics from our first month in operation already give an added insight into the private rented sector. The average deposit of £558 is far higher than previous estimates, but similar to the average monthly rent in the Metropolitan Belfast area of £561.

“This is consistent with a typical deposit of four weeks’ rent, so we can be confident the figures are representative of the current market.”

Landlords can either transfer the deposit to be held by TDS Northern Ireland free of charge, or hold the money and have it protected by the scheme’s insurance for a small fee.

Mr Harriott continued, “Interestingly the value of deposits protected by the insurance scheme has been far higher than those transferred into the custodial scheme, at £634 and £490 respectively. This reflects the experience in England and Wales where the insurance scheme attracts higher value deposits.”

The average deposit in Northern Ireland is lower than in Scotland where it is £671 and in England and Wales at £992, a reflection of lower rents.

Hidden costs
Meanwhile, the hidden costs of renting private accommodation in Northern Ireland have been revealed in an undercover survey carried out by the Housing Rights Service (HRS).

Mystery shoppers conducted a survey of 40 lettings agents across the country and found that upfront fees of as much as £100 were demanded by some agents to cover routine services such as credit checks and general administration costs.
This was on top of a deposit - normally one month’s rent - and a month’s rent in advance.

The investigation found that the average cost charged by letting agents for such fees was £48, with the highest cost £100.

The HRS believes such fees can create major financial obstacles for prospective tenants to overcome when they already face paying a month’s rent in advance and a deposit before they even receive the keys to their rented accommodation.

Unlike estate agents, letting agents are unregulated and under no compulsion to hold membership of an ombudsman service, leaving dissatisfied tenants with no access to redress.

Nicola McCrudden, HRS policy manager, said: “We are concerned that many local letting agents are not only increasing financial pressures on hard pressed tenants who urgently need a roof over their heads and who, in many cases, have little or no choice but to pay these charges; but they are also undermining the work of those good letting agents who offer a fair deal to tenants.

"The charges are particularly unjustified considering that many landlords are also likely to be paying agents for the same services as tenants. There is a real danger that these fees are preventing some people on low incomes from finding suitable private rented accommodation and could be adding pressure on already over-subscribed social housing waiting list.”

              

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