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Fresh calls are being made for tenants’ deposits to be scrapped. Campaigner Ajay Jagota of Dlighted, which offers deposit-free insurance for the private rental sector, claims that tenants are having to borrow money in order to survive and this includes raising funds needed for their tenancy deposit. If they are forced into debt and have problems paying it off, this could put their tenancy at risk.

The latest statistics from the Money Charity show the average total debt per UK household, including mortgages, stood at £57,349 in July. That is an average debt of £30,661 per adult, which is 16% more than the average annual earnings. If the tenants’ deposit was scrapped, then this could ease the burden when you consider that the average UK rent is £908 and the deposit is at least one month’s rent. Mr Jagota said that more tenants have to borrow the deposit or run up other debts in order to secure their rental property. He also pointed out that landlords who ask for a tenancy deposit are limiting themselves to clients who have about £1,000 to hand. He argues that it does not make sense to put tenancies at risk by imposing a financial burden on tenants which does not offer the same level of asset protection that they would get with an insurance policy.

However, it could also be argued that the high level of personal debt means it is more important to secure a cash deposit in case of non-payment of rent. This high level of debt suggests that people do not have savings to fall back on and so will not have access to emergency cash. If a person pays a deposit, then it is also an incentive to look after the property and pay their rent on time so that the deposit will be returned at the end of the tenancy.

The argument for scrapping deposits comes as fresh research shows average earners are at risk of being priced out of the rental market altogether. A report by tenant referencing and insurance company Landlord Secure shows 19% of landlords would expect a potential tenant to have an annual salary of at least £30,000 before considering them. This is despite the fact that the average annual salary is about £27,000. About 47% of landlords thought higher wage-earners would have better credit scores and an improved financial track record, which is not always the case. That said, one in four landlords would consider tenants earning at least £15,000 a year while nearly one in five would not rule out tenants earning the minimum wage.

Landlord Secure managing director Steve Burrows said that choosing tenants should be based on their present financial stability which is not necessary linked to their salary. Those earning less but with a record of meeting payments should be taken into consideration too. If landlords were able to see an applicant’s credit score when making their financial checks, this would help them to make an informed choice about whether to accept a tenant or not.