In a survey undertaken by my|deposits, they found that four out of 10 tenants claim to have had to borrow money to pay for their tenancy deposit; the average amount being paid is £2,344.
In order to meet that sum, prospective tenants are turning to their parents for financial help in 25% of respondents, while another 10% said they had to borrow money from friends before they could move into a new property.
Another 8% took the risky route of borrowing money from a bank or payday lender to help fund a deposit.
The chief executive of my|deposits, Eddie Hooker, said: “It’s worrying to learn that a large number of prospective tenants appear to be struggling to pay a deposit on a new rental property and that they have to borrow in order to do so.”
Tenants urged to use Tenancy Deposit Protection (TDP) scheme
He said that the survey highlighted why it is important that tenants ensure that any money which they hand over to secure a rental property is then properly protected with a government Tenancy Deposit Protection (TDP) scheme.
By not doing so, these tenants are running the risk that they will not have their money returned when their tenancy comes to an end, Mr Hooker warned.
This will inevitably, he added, make their financial situation even worse because they will be out of pocket and still owe money to those they borrowed it from.
The TDP was introduced in a bid to help protect tenants from losing their tenancy deposits and they should ensure that their landlord or letting agent has properly registered and deposited the money with one of the official schemes.
By doing so, they will stand a better chance of getting their deposit returned quickly when their tenancy comes to an end – and not leave them in the position of having to borrow again for their next rental property.
Best practice urged for tenancy deposits
This situation is not only a warning for tenants but also for landlords, said Carolyn Uphill, the chairman of the National Landlords’ Association (NLA).
She added: “Money problems are, it would appear, becoming more common which is one of the reasons why we have launched our Effective Letting Campaign, which is aimed at highlighting the importance of everyone taking a best practice approach when letting a property. “
By following this advice, Ms Uphill says that the tenancy will be a healthy and happy one for all who are involved.
She explained: “By adopting a best practice approach for every stage of a property’s letting cycle, the likelihood of common problems arising will be reduced.”
