Deposit-free renting could be on the horizon, according to deposit reform campaigner Ajay Jagota, of Dlighted.
Is Deposit-Free Renting on the Horizon? One Campaigner Thinks So
With almost 5.8m households expected to be living in the private rental sector within four years, the amount of cash sitting in tenancy deposits is set to surge by around 40% – and that’s despite Government plans to cap security deposits to just one month’s rent, as announced in the recent Queen’s Speech.
Jagota believes that with the average UK tenant currently needing £967 for a deposit, around £5.8 billion worth of funds will be held as tenancy deposits by 2021, reflecting predicted growth of around 24% in the number of households renting privately.
Jagota described the figure as “the absolute scandal of wasting money to fill the funding gap on social care on literally nothing”.
The figures, from a survey conducted by Knight Frank, also show that 37% of tenants now rent out of choice rather than necessity, with renters naming the flexibility and fewer responsibilities of renting as primary reasons for not purchasing properties of their own.
The study also found that 68% of tenants still expect to be living in the private rental sector in three years’ time.
Jagota insists: “Tenancy deposits are a blatant economic inefficiency in serious need of Government intervention – an intervention which could save almost six million renters an average of £1,000 by the time of the next election.
“The £3.5 billion already is an eye-watering figure enough, but the £5.8 billion it could rise to within five years is monstrous. With 97% of deposits unnecessary, this is an absolute scandal.”
He believes: “I’m not convinced a deposit cap goes anywhere far enough, but I believe the industry has to accept that this is just the first step.
“I predicted pre-election that tenancy deposit reform is now irrevocably on the agenda and, even just this week, deposit-free renting was proposed in an influential blog by leading property academic Professor Brian Sturgess.
“The tide is turning in favour of deposit-free renting, and those of us who have worked so hard to put reform on the agenda – even when it has not been a very popular attitude in our industry – are entitled to feel a little vindicated.”
Jagota claims: “There are an infinite number of better ways all that money could be spent, and by abolishing outdated tenancy deposit schemes with deposit-free renting and landlord insurance, we can save renters a fortune while giving landlords better protection and boosting our economy, or facilitating generation rent onto the housing ladder via transfer of funds into Help To Buy ISAs.”
Do you agree that deposit-free renting is on the horizon? And is this a good thing?