In the Queen’s Speech earlier this year, the government said it would cap deposits at one month’s rent to help tenants with up-front costs.
Along with Citizens Advice, Shelter and Crisis, Khan had lobbied government to cap deposits at three weeks’ rent. However, ministers have listened to letting and estate agent calls for a six-week cap.
Khan said this is no different from what is already often the standard amount in the capital and will see renters face up-front costs of about £2,000. That’s double the £1,000 deposit cap proposed by the mayor, and £500 more than the government originally planned.
Khan also proposed a cap on ‘holding deposits’ – charges that cover the cost of references or losses in rent if a new tenant needs to be found. He proposed this be set at one day’s rent, around £50.
However, the government now says a holding deposit will be capped at a week’s rent, which would work out in London at around £340.
Khan has also criticised the government for not taking the opportunity to bring financial penalties for letting agents into line with those currently in place for landlords.
He argued they should be put on par with the £30,000 fines councils can use to punish rogue landlords for breaching housing legislation.
Instead the government has set the initial fine for breaking the law at £5,000.
Khan, said: “This government once again has proved it is all talk and no action when it comes to making it more affordable for those struggling to rent or buy a home.
“Ministers have bottled it on their commitment to reduce up-front deposits, which we know hit thousands of low-income Londoners the hardest.
“While I welcome the fact lettings agent fees paid by tenants look set to be finally banned – the caps on deposits and holding deposits are almost meaningless and will do nothing to make renting more affordable for Londoners.
“Instead the government should cap deposits at three weeks’ rent, raise the penalty for charging illegal fees to £30,000 or a criminal prosecution, and give local authorities extra funding to enforce these new penalties.”