Has the U.K. solved renters' security deposit problem?

By Lucy Cohen Blatter | October 7, 2015 - 2:30PM

There are some major differences between renting a flat in London and an apartment in New York. First, many Londoners live in big, Victorian-style houses with lots of roommates; secondly, the rent in the United Kingdom is usually advertised by its weekly price rather than monthly. And, according to an article in Slate, Londoners—and U.K. dwellers in general—are more likely to get their security deposits back without having to engage in costly legal battles.

It's all thanks to something called a "tenancy deposit protection scheme." As part of a housing bill passed in 2004, landlords in the U.K. "can no longer simply hold on to their tenants’ deposits. Instead, an apparatus exists to take the money and keep it in custodial accounts, not to mention rule on disputes over it when they occur," reports Slate.

Here's how it works: Most landlords—with the exception of those who live in the home they're renting out—must keep tenants' deposits in "government-approved holding agents or, if they do prefer to keep the money in their own accounts, purchase insurance to guarantee the sums."

After the lease ends, and the landlord and tenant come to an agreement over the amount to be given back, and the money must be returned within 10 days.

"If there’s a dispute over whether damages occurred or the cost of the repairs needed, the parties can choose to go to what is called an alternative dispute resolution service, which are run by the organizations that hold the money. They cost nothing but require both parties to agree to be bound by the decision. This prevents prolonged court battles," writes Slate.

For renters, the upside is obvious: You don't have to worry about losing your security deposit or having to launch an expensive case against a landlord who won't return it. For the landlord, the main benefit is that it reduces the likelihood that tenants will skip out on their last month's rent, expecting the security deposit to cover it.

It's not a perfect system, of course. And Slate points out that only about half of mediators side with tenants over landlords. But it may be an improvement here in New York City, where getting your security deposit back can feel a bit like the Wild West.

Ask Sam: How much security deposit can my landlord charge for a rent-stabilized apartment?

Security deposit self-defense: What you need to know now

Security deposit 101: What your landlord will (and won't) forgive

Brick Underground articles occasionally include the expertise of, or information about, advertising partners when relevant to the story. We will never promote an advertiser's product without making the relationship clear to our readers.