Deposit protection scheme on the way to help landlord-tenant disputes

Landlords can't claim tax relief on mortgage interest unless they have registered with the PRTB.

Paul Melia

The Government is finalising plans for a deposit protection scheme to help protect tenants in the event of disputes.

The Private Residential Tenancies Board (PRTB), currently responsible for registering tenancies and adjudicating on disputes, will retain the deposits until both landlord and tenant agree it can be released.

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The PRTB last year dealt with 801 cases of deposit retention, representing 15pc of all cases.

It has been given permission to increase its workforce from 30 at present to 42, in part to help administer the scheme.

Deposits typically represent one month's rent, and are currently retained by landlords.

In cases of undue wear and tear on a property, a portion - or all - of the deposit is held back by the landlord to make necessary repairs. However, in some cases, the money is never returned, leading to disputes.

The problem became particularly acute five years ago as the numbers of people emigrating rose due to the recession.

The move will affect almost 700,000 people living in the private rented sector. The PRTB says some 323,000 tenancies are currently registered.

PRTB director Anne Marie Caulfield said it had sanction to increase staffing numbers to cope with the workload.

"The size of the sector has doubled, the caseload has doubled, enforcement has gone up four-fold," she said.

"The key issue now is the rent arrears, but it used be deposits.

"Before, people would get the deposit back and move on. But now there's a shortage of properties for people to move on to."

It is expected that the scheme will be self-financing, with operational costs to be covered through income earned on deposit holdings. Given the size of the sector, the amounts to be retained would run into the tens of millions of euro.

The model being pursued is called a custodial scheme, whereby tenancy deposits are transferred to the scheme for the duration of the tenancy.

They are then repaid following agreement between the landlord and tenant, or following the outcome of a disputes resolution process.