Tenants tied up in rising deposit costs

Tenants tied up in rising deposit costs

0:01 AM, 19th September 2024, About 2 months ago

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Tenants moving between rental properties could have thousands of pounds tied up in deposits, according to new research.

A study by deposit alternative supplier Reposit reveals that the average cash deposit has risen to £1,345 in August 2024, up from £1,307 in August 2023.

When moving, tenants often need to pay a deposit for their new place before their old deposit is returned.

This increase means tenants might have £2,652 tied up in deposits while waiting for their old deposit to be returned and paying for a new one.

40% of tenants borrow money to fund their cash deposit

According to Reposit, a five-week cash deposit has increased by 4% since the start of the year – almost double the rate of inflation which is currently running at 2.2%.

Cash deposits are rising in line with monthly rents which are now hitting £1,166.

Ben Grech, CEO of Reposit, explains how deposit alternative products address the challenge tenants face when moving between rental properties.

He said: “Deposit alternative products alleviate the age-old problem for tenants of how to fund their next deposit while awaiting the return of their previous one. With our product, tenants pay one week’s rent as a non-refundable fee so they can keep hold of their remaining sum and invest it or put it to better use right now.

“Using our latest figures, this means that instead of having to raise a total of £1,345 for a cash deposit, a tenant pays £269 instead. The tenant can keep hold of £1,076 and our research shows most choose to put this money towards their moving costs and buy essentials such as furniture. For others who choose to invest it, they can benefit from around 4% in interest while having the flexibility to keep hold of their cash.

“We know that almost 40% of tenants borrow money to fund their cash deposit, with 20% turning to credit cards and 8% using a personal loan.”


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