Tenants Borrowing for Deposits: A Growing Trend
- Sarah Ruivivar
- Apr 2
- 2 min read
In the world of renting, it seems cash deposits are becoming a financial hurdle for many UK tenants.
A recent survey by Reposit reveals that one in five renters are borrowing money to cover their five-week cash deposit. With the average deposit hitting around £1,218, it's no wonder tenants are feeling the pinch.
The survey highlights that 6% of tenants borrowed £1,500 or more, while 18% secured between £1,000 and £1,500, and 24% borrowed £500 to £1,000. Interestingly, tenants in the North East are borrowing higher amounts, despite lower rents compared to the South. Meanwhile, London, the West Midlands, and the East Midlands also see significant borrowing trends.
The age group most frequently borrowing is 18-34, but the 55-64 age bracket is borrowing larger sums, likely due to higher rents. Women, in particular, are finding themselves needing to borrow more than men.
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Ben Grech, CEO of Reposit, points out that the traditional view of cash deposits as a sign of financial stability is outdated. Instead, these deposits are pushing tenants into debt just as they move into a new home. With rents and deposits at record highs, many tenants are turning to credit, adding to their financial strain.
Grech suggests that deposit alternatives could ease this burden, removing the need for a hefty upfront cost. He also emphasises the importance of thorough tenant referencing and affordability checks to ensure financial stability without the need for large deposits.
As the Renters Rights Bill approaches, landlords are increasingly focused on assessing tenants' financial health to avoid potential rent arrears and disputes. Perhaps it's time to rethink the deposit system and offer tenants a more financially sustainable path to renting.
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