A report conducted by Which? shows that 43 per cent of renters have to borrow, in some cases using a credit card, in order to fund their deposit.
The report, “Reform of the private rental sector: the consumer view,” aims to take an “end-to-end approach” to the process of searching for, moving into, and moving out of, rental accommodation.
As well as revealing that many people have to go into debt in order to scrape together the mean average deposit of £803, it also showed that significant numbers of renters experience problems when claiming their deposit back.
Of respondents who have moved out in the past two years, one is six had to wait over four weeks to get their deposit back, with a third of tenants having to pay a new one in the meantime.
The analysis also highlights a lack of clarity concerning deposit deductions – from both tenants and landlords. The report shows that 62 per cent of landlords asked believe that deductions can be made for unpaid utility bills, and 18 per cent for wear and tear. In 9 per cent of cases, the tenant received no reason for a deposit deduction.
Which? Managing director of home products and services Alex Neill says: “The number of people going into debt to cover the cost of a new deposit is concerning, particularly when you consider that many are forced to wait a significant time to get their previous one back, and could then face deductions that they don’t think are reasonable.
“The findings highlight that the deposit system is crying out for reform to make it fit for purpose for the record numbers of people who are living in rented accommodation. We believe that the government must tackle the issues that we have identified in our report head on to ensure that the rental market delivers for consumers.”
A ministry of housing, communities and local government spokesperson adds: “We are determined to help the millions of renters in this country by banning unfair letting fees and capping tenancy deposits.
“The new measures in our Tenant Fees Bill will save renters around £240 million a year.
“The current tenancy deposit scheme works well but we have recently set up a working group to see if the system could be improved.”
The ministry also points out that, according to its research, fewer than 2 per cent of deposits are disputed, “suggesting that the current system works for landlords and tenants”.