The FCA this week revealed that British households have run up a combined £200bn of unsecured consumer credit, a figure rising by 10% a year, with FCA Chief Executive Andrew Bailey admitting that the situation “needs government involvement”.
Charity Stepchange has highlighted renters as one of the most affected groups, noting a “trend for low-income families to rely on credit to buy essential items”.
The charity’s annual report states that four out of five of clients struggling with debt live in rented accommodation.
Property campaigner Ajay Jagota was the first letting agent in the UK to abolish traditional tenancies deposits, protecting landlords instead with deposit replacement insurance policies.
He believes landlords and letting agents are risking rent arrears, empty properties and legal costs by continuing to require tenancy deposits.
He said: “If you ask for a tenancy deposit, you are immediately limiting yourself to tenants who have close to £1000 to hand. More and more of them now have to borrow that money or run up other debts to be able to afford to be your customer.
“By putting them in that position you aren’t protecting yourself, you’re making it more and more likely that your property will stay empty, end up empty or that you will end up facing severe rent arrears or bailiff and lawyers fees.
“As a landlord and letting agent myself I’m not trying to run a charity, but surely it is absolutely senseless to voluntarily put tenancies at risk by imposing a financial burden that only offers a fraction of the £600,000 of asset protection an insurance policy like ours does, and doesn’t offer free legal support and a rent guarantee.
“My priority is to find and keep good tenants, and there is a better way to do that – and that way is deposit-free renting.”
