Deposit Alternative chief says tenants face “incredible challenge”

The average rental deposit in the UK is now £1,434, based on the requirement that a deposit is set at up to five weeks’ rent.

The figure has come from Zero Deposit, a deposit alternative supplier.

It says that at the same time, the average individual takes home £2,228 per month net, suggesting that if they take a deposit from just one month’s income - and not from savings or any other source - they have to allocate allocate 64 pet cent of that single month’s income. 

From then on, they then need to spend 56 per cent of their income every month to cover the cost of their rent, claims Zero Deposit. 

Due to the pace of the rental market, this cost is often required within the same month as the initial deposit payment meaning a typical UK tenant may have to find £2,677 in month one to secure a rental property.

Deposit alternatives are under scrutiny at the moment following a statement from the Competition and Markets Authority that it would investigate the niche sector as it surfaced as an “area of concern” regarding consumer rights. 

Deposit alternatives have also been the subject of probes by The Observer newspaper and comment from the Citizens Advice charity in recent years. 

However, Sam Reynolds - chief executive of Zero Deposit - says that the traditional concept of the five weeks deposit plus rent on top is “an incredible financial challenge” for many tenants.  

He adds: “High demand for rental properties means it’s a task in itself to find a suitable property and, once you have, there is the sizeable upfront cost of a tenancy deposit to contend with. This is made all the worse by the fact that many have to pay up before receiving their previous rental deposit back. 

“This simply isn’t financially viable for the average tenant and, as a result, many are unable to move at the pace that the current rental market requires, leaving them in a cycle of being stuck in a property they are keen to leave, forced to borrow to find the deposit or effectively out in the cold and without a home.”