Tenants apparently do not have enough money in savings to even pay for their rental deposit. New figures from Dlighted, which offers deposit-free renting, show landlords and letting agents across Britain are asking for £1,507 on average for a deposit in the larger cities. However, one in four families only has an average of £95 in savings. Excluding London, the largest deposits are in Edinburgh at £2,631 and Brighton at £2,589, whilst the cheapest are in Bradford and Hull, both asking £684 for a deposit. The average deposit tenants need to find for the UK’s largest cities is £1,407, whilst for London it is £3,015.
Often, tenants will have to pay this deposit before they have had the deposit returned from their existing rental property. So they need to find the money upfront to pay their first month’s rent, the deposit and any moving costs. This figure could put tenants off moving home, which is not good news for landlords. Dlighted Managing Director, Ajay Jagota, asks if it is good business to expect tenants to find 16 times their average life savings just for becoming a customer. He suggests deposit replacement insurance is a win-win situation for tenants and landlords. Tenants do not need to find deposit money. Landlords have greater protection against damage or unpaid rent. By using this scheme instead of asking for a deposit, landlords could open up a whole new sector of potential clients who were put off from renting with them because of the high deposits required.
By asking for a deposit, landlords are limited to tenants who have available money for the deposit or it puts their customers in financial difficulties from the offset. Deposit replacement insurance schemes cost much less than one month’s deposit – about £129 per year where monthly rents are up to £2,500. Any disagreements at the end of a tenancy can be resolved between the landlord or tenant. If an agreement is not reached, then the landlord can claim on the insurance, with the tenant being liable for the costs of any successful claim. With some other schemes, it is the tenant who pays for the policy. Many will be willing to buy the insurance because it is much less than the deposit they would need to find and more secure. This could be an avenue to explore for the benefit of both parties.
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