Tenants relying on credit or borrowing to fund cash deposits

Nearly one third (30%) of tenants are borrowing money to fund a cash deposit, a survey by Reposit has shown.

Some 13% of renters are using credit cards, 14% are borrowing from friends or family, 8% are dipping into their overdrafts and 6% are using personal loans.

Ben Grech, chief executive of Reposit, said: “There’s a common misconception within the industry that tenants who can’t afford a deposit of five weeks rent, can’t afford to take on a tenancy.

“However, a tenant’s capability to produce a lump sum of five weeks rent is not a reliable indicator of their financial stability, or whether they can afford their monthly rent on an ongoing basis.”

With Reposit, tenants pay only one week’s rent (as a non-refundable fee) while offering landlords eight weeks protection instead of the usual five weeks rent completely free of charge.

Deposit alternative products were highlighted in the updated ‘How to Rent’ guide, published by the government on 24 March.

Grech added: “We’re pleased to see the Government’s acknowledgement that deposit alternatives are an increasingly relevant part of the UK’s private rented sector. Equally we support the message that tenants should check if the product they’re offered is FCA regulated.”