New rules to introduce deposit passporting are in the pipeline, allowing tenants to automatically transfer deposits between landlords when they move home.

The measures would allow renters to transfer deposits electronically, instead of having to pay a deposit for their next property while waiting for a refund on their former home.

The measures are in addition to a new five week cap on tenancy deposits which became law in 2019.

Ministers are considering the scheme, known as deposit “passporting” to make the system simpler for renters.

In today’s Queen’s Speech statement, the Queen confirmed a White Paper has been drawn up to review reforms for renters – namely a lifelong deposit that they can move from flat to flat.

Tenants need an average of £1,040 upfront each time they move
Tenants need an average of £1,040 upfront each time they move

The planned scheme is designed to ease the pressure on millions of renters who typically need up to five weeks rent to fund a deposit for a new rental home while having money tied up with an existing landlord.

According to the Deposit Protection Service, the average rental deposit is £1,040 in England and Wales, while tenants in London face paying around £1,750 when moving property.

Passporting would allow a direct transfer of funds from the previous landlord to the new one on the day of the move.

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.

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Director of the charity, Dan Wilson Craw, has previously commented on the need for a passporting system.

"Instead of introducing a new Poverty Premium, we should make the existing system better by finding ways to allow payment by instalments, investing deposits so that tenants get a decent return on their money, and passporting them between tenancies," he said.

The Tenant Fees Bill has already banned landlords and estate agents from billing tenants for basic administration, references and credit checks, which are collectively costing them £240 million a year.