People will be put at risk of homelessness if landlords are allowed to demand deposits of two-months from would-be tenants before they are given the keys to a new home, a leading housing charity has warned.
As it stands, there is no legal impediment stopping a landlord from demanding a deposit of any amount which means that people on lower incomes who are trying to find a home in the current market are in danger of being squeezed out, the chairwoman of Threshold Aideen Hayden has warned.
She said setting the financial bar so high was, effectively, screening potential tenants to ensure those on lower incomes could not get access to certain properties.
Ms Hayden was speaking after it emerged that Irish Residential Properties Reit (Ires Reit), which owns 2,400 apartments in greater Dublin, had started imposing such a precondition on would-be tenants..
Ires Reit charged an average of around €1,500 a month in rent on its property portfolio, according to figures published last year, which means that tenants would need to have over €3,000 to pay up-front as a deposit, along with about €1,500 in rent for the first month before moving into their home.
“We want one month’s rent to be defined in law,” Ms Hayden said. “At the moment there’s no legal definition of deposits in Ireland. There’s no legal minimum or no legal maximum in relation to deposits and that lacuna needs to be filled.”
Speaking on RTÉ radio on Tuesday morning she said said high demand and a shortage of supply in the rental sector had led to deposits of two months "creep in".
“This is lowering the properties available to those who are dependent on the State or those with low incomes. They’re asking for something that they know low income renters can’t deliver,” Ms Hayden said.
“Charging two months’ deposits is a way of screening tenants and will lead to homelessness as it will make it almost impossible for those in difficulty to secure accommodation,” she added.
However information officer with the Irish Property Owners’ Association Margaret McCormack defended moves by some landlords to demand deposits of two months claiming that the traditional one month deposit was “simply not enough to cover damages”.
She said property was “a very expensive investment - to purchase, to maintain, to refurbish. One month’s deposit can do very little to repair damage.”
She said that if a property was damaged the legal procedures that landlords needed to follow were “very difficult’ and said it can be a very long process. “If the property is left in perfect condition then the deposit is given back. If there is major damage that deposit will be needed for repairs. One item can be easily destroyed on a property. One party can destroy a floor and one month’s rent as a deposit won’t cover the cost of that repair.”
While concern is growing over landlords seeking more than one month’s deposit, it is actual common practice in other countries.
Across Europe it is not uncommon for landlords to seek a deposit equating to as much as three months rent however one key difference is that deposits are put into special escrow accounts and can not be touched without the consent of both the landlord and the tenant and any interest accrued goes to the tenant. This means that landlords can not profit from substanital deposits and can not withhold them unless there is a legitiamte reason.
Problems with the return of desposits generate more complaints with the Tennancies Board in the Republic than any other single issue.
Denise Curtin is moving up to Dublin for work having recently graduated from college in Limerick and she described house hunting in Dublin as being “like something out of the Hunger Games. It’s just crazy and the rents are astronomical” she said.
She is looking with two friends and they have a budget of around €2,000 a month. “I have not come across any landlords looking for a two month deposit yet but we would find it almost impossible to pay €6,000 up front before we could move it. I certainly would not be able to do that without help from my parents.”
