A reform of the law to ensure that tenants do not have deposits illegally retained by landlords has been approved by the Cabinet.

Minister for Housing and Planning Jan O’Sullivan yesterday asked the Government to approve changes in the law governing the private rented sector to give tenants protection on the issue of deposits.

The scheme will involve the appointment of an independent operator who will hold and return deposits to tenants when they leave their accommodation.

The Cabinet also gave the green light to plans for strengthened provisions against anti-social behaviour in the private rented sector.

The changes will now be introduced at the committee stage of the Residential Tenancies Bill when it comes before the Seanad shortly.

Following the Cabinet meeting Ms O’Sullivan said she was pleased she had received approval to proceed with the deposit protection scheme.

“Disputes over the return of deposits are one of the most significant sources of complaint in the private rented sector and this significant reform will introduce a workable, independent scheme that is fair to both tenants and landlords,” she said.

The Minister added that she intended to appoint an independent operator to hold and manage deposits. “The scheme will be self-financing, covering operational costs through income earned on deposit holdings,” she said.

“This new deposit protection scheme will also be responsible for returning deposits to tenants and will also operate a dispute resolution process where there is a dispute between the landlord and tenant.”

Ms O’Sullivan secured Cabinet approval for other committee stage amendments including enhanced provisions against anti-social behaviour.

One amendment will make explicit the right of bodies such as a residents association or a neighbourhood watch group to bring complaints to the Private Residential Tenancies Board.

Another amendment will remove the requirement for neighbours to raise issues of anti-social behaviour with tenants before taking further action. It will now be sufficient to try to resolve problems with the landlord before bringing a case to the Private Residential Tenancies Board.

“These are important changes that will modernise our landlord-tenant system. In recent years we have seen significant increases in the number of people renting and it is important that our law and our regulatory system continues to evolve to ensure that people’s rights are protected.

“In 2014 I will continue to focus on reform of the private rented sector to ensure that we have a modern, effective stable sector that serves the best interests of tenants and landlords.”

A commitment to deal with the issue of deposit retention by landlords was contained in the Programme for Government agreed between Fine Gael and Labour before they took office in March 2011.