Member Article

Half of renters borrow cash to pay deposits

Almost half of people have to borrow money from parents, friends and payday lenders to pay deposits on new rented homes – leading one North East property boss to repeat calls for landlords to abolish the practice of asking new tenants pay hundreds of pounds up front unnecessarily.

Figures from tenancy deposit protection scheme mydeposits show that 40% of renters are unable to afford the deposit fees in excess of £500 often required to rent North East homes.

The research showed 25% of them have to turn to their parents for help, with a further 10% borrowing cash from friends, and 8% being forced to take high-interest loans from payday lenders and banks.

The news came the same week as official figures showed that more and more cash-strapped tenants are falling behind with rents each month.

North East property firm KIS Lettings was the first in the UK to do away with tenancy deposits – asking new tenants to instead nominate a property-owning friend or family member to guarantee their rent, and giving landlords peace of mind with a unique landlord insurance policy.

The firm – which manages properties for 700 landlords from branches in Sunderland, South Shields, North Shields and Welwyn Garden City – was recently named Letting Agent of the Year at the national Landlords and Letting Awards.

Managing Director Ajay Jagota said: “Any landlord should be concerned at news that as many as half of tenants struggle to find the money they need to start a tenancy, and doubly concerned that they could be having serious debt worries as a result.

“In a time when a lot of people are struggling just to make ends meet and with Christmas just around the corner no landlord can afford to turn good tenants away or put unnecessary financial pressure on the tenants they have – least of all in the name of a relic from a bygone age.

“Deposits don’t make sense. Will £500 fix much in the case of serious damage to your property? No. Will it pay for the legal fees to pursue people who don’t pay their rent? No. Can you guarantee that you can convince your deposit protection scheme you’re entitled to it anyway? No.

“In two years our Easy Rent policy has a 100% success rate and led to only one dispute with a guarantor, an investor who was so impressed we now manage his properties.

“All landlords want the same thing - a foolproof way to get and keep good tenants. Deposits are an obstacle to that and in my mind it’s clear – they need to be abolished once and for all.”

This was posted in Bdaily's Members' News section by Ajay Jagota .