Rent deposit rows rise by 40pc after new property taxes squeeze landlords

♦ Rental deposit disputes are rising sharply with a 40 per cent increase last year, just as landlords have been hit with new property taxes.

Figures released by the Property Redress Scheme, one of three government-licensed schemes for resolving disputes between renters and letting agents, show the number of complaints has risen sharply.

Disputes are logged when renters believe their landlord has unfairly withheld some or all of their deposit from them at the end of a tenancy.

It comes just as landlords have been hit with an additional three per cent stamp duty on rental properties, in addition to new tax rules which ban them from offsetting mortgage interest from their tax bill.

Experts suggested that the rise in disputes could be the result of a desperate bid by cash-strapped landlords to squeeze more money out of tenants by retaining some of their deposit.

Ajay Jagota, a housing campaigner, said: “Some landlords will be squeezed because of recent tax changes, and they will be looking to generate extra revenue wherever they can.

“I don’t think the rise is to do with heightened awareness of the scheme, as the PRS has said.”

Last year the PRS awarded a total of £152,819 in compensation to around 400 complainants, but as most tenants who are unfairly cheated out of their deposit never log a dispute the true figure for the number getting ripped off is likely to be far higher.

Objections about tenancy deposits are the second most common overall complaint about renting, the PRS said, making up 27 per cent of the overall total.

By law letting agents must join one of three government-licensed independent bodies – also including the Property Ombudsman and Ombudsman Services Property – to whom tenants, landlords and leaseholders can take complaints relating to a tenancy.