Opinions across the housing industry are decidedly mixed on the upcoming Tenant Fees Bill, which proposes a six-week cap on tenant deposits as well as a letting fees ban – but Labour wants deposits reduced even further.

The Tenant Fees Bill is expected to cause a major shake-up in the private rented sector (PRS) for both tenants and landlords, as well as letting agents, with the aim of making the whole process fairer and more transparent.

Some of the measures, such as banning letting agency fees altogether and capping tenant deposits at six weeks’ rent, have been controversial in parts of the sector, while others have praised the proposals for providing a fairer deal to tenants.

However, Labour has come forward with a further suggestion to the current Bill, arguing that deposits should actually be capped at a maximum of three weeks’ rent.

Melanie Onn, shadow housing minister, said in a tweet last week: “Labour is fighting for a new three-week limit for rent deposits.

“The current deal for private renters is unacceptable – Labour in government would do more to protect them.”

Landlords might be worse off under this proposal

But the issue many have with Labour’s proposal is that it is too extreme, and unfair on landlords who need the security of a full tenant deposit to cover the costs if the tenant leaves the property without paying the last month’s rent, or leaves it in a state of disrepair – or both.

Having a six-week deposit goes some way towards mitigating this risk for landlords. Furthermore, with many expecting letting agents to pass on the cost of the fees ban to landlords by upping their bill, hitting landlords with a reduced security deposit, although making things cheaper and potentially fairer for tenants, could be a step too far in the opposite direction.

David Cox, ARLA Propertymark chief executive, said: “As I laid out to the Public Bill Committee on Tuesday, the purpose of the deposit is to mitigate against unpaid rent and damage to the property. Many tenants do not pay the last month’s rent which is then covered by the security deposit.

“This amendment won’t allow for that, which risks leaving a landlord without the full final month’s rent or repairs for any damage. It’s not clear how this proposal of three weeks’ deposit has been worked out.”

The Bill is currently at committee stage having passed a second reading by Parliament, and is receiving submissions until 12 June.