The Passporting Scheme Has Its Merits, But Not All Agree


The government is thinking of introducing a new ‘passporting’ scheme which will allow tenants to transfer rental deposits directly between landlords.

Under the current system, tenants must pay the deposit for the next property while waiting for the refund on the previous one.

‘Passporting’ would allow a direct transfer of funds from the previous landlord to the new one on the day of the move, thus alleviating any cash flow issues from a delay in securing the release of the deposit.

On the face of it, it seems to be a reasonable approach; the previous landlord would still be able to claim part of the deposit for any damages, and the tenant could top up the deposit if necessary.

Importantly, the tenant hasn’t got to find the additional money and the landlord still ends up with the deposit on the day of the move.

Whilst the proposed scheme has drawn praise from various tenant advocacy groups and campaigners, it has drawn criticism from some landlords.

One particular concern is that if the deposit is transferred before dilapidations are decided, the previous landlord will find it difficult to recover the money from the tenant.

In the light of the farce over Brexit, faith in the integrity and ability of British politicians is not particularly high at the moment. Many people are not giving them the benefit of a doubt when it comes to deciding whether their intentions are honourable.

It is inevitable that with the possibility of a general election in the near future, the scheme is viewed by some as yet another attempt to curry favour with tenant voters. If this is the cost of being seen to be driving another nail in the coffin of the private buy-to-let sector, then that is a price the government is prepared to pay.

From the government’s point of view, it is all about perception in the run-up to the election. After being re-elected, it can do – and usually does – whatever it wants, irrespective of the promises it has made.

No matter what was behind the reason to propose the scheme, it has its merits and if implemented correctly, it should not adversely affect landlords.

This is only a proposal and irrespective of whether it is introduced, the private buy-to-let sector should still flourish post-Brexit, despite the pronouncements from the conservative government. We will leave it to our readers to decide if the same can be said if we end up with a Labour government.


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