"Renters don’t have savings and half their money goes on rent so first-time buyers clearly need help saving for deposits"
Property campaigner Ajay Jagota believes a simple solution would be to let renters put their tenancy deposits into savings accounts – with their landlords better protected with insurance policies.
University of Bristol research has discovered that 33% of private renters have less than £100 in the bank, compared to 14% of mortgage holders. The University’s Financial Wellness report also estimates that private renters spend half their monthly income on rent – although research from North East sales and lettings firm KIS suggests this figure falls to just 28% in the region.
The report also estimates that 20% of renters have to cut back on their food in order to pay the rent, with 14% having to borrow money from friends or family and 8 % forced to sell possessions to raise cash.
Tax changes coming into effect into April – including alterations to stamp duty, changes to mortgage interest tax relief and the scrapping the wear and tear allowance – may also force up rents, putting home ownership even further out of reach for first-time buyers.
Ajay, founder of the Protech Deposit replacement insurance solution Dlighted which is an alternative to the cash Tenancy Deposit schemes TDS, DPS and Mydeposits, had this to say: “Housing Minister Gavin Barwell stated when he launched the Housing White Paper recently that there is ‘no silver bullet’ when it comes to solving the housing crisis – but on this issue there really is.
Renters don’t have savings and half their money goes on rent so first-time buyers clearly need help saving for deposits. A simple start would be to let them put the money they are currently putting into tenancy deposits into a savings accounts instead.
Gavin Barwell recently admitted to the House of Commons that 98% of deposits are handed back uncontested. That’s £3.1bn of renters money needlessly locked away when it could be being put aside for a home of their own.
Landlord insurance provides property investors with much more comprehensive protection. At the same time a tenancy where renters are getting into debt, selling off their stuff and going without food to pay the rent clearly isn’t a sustainable one, so why would landlords put themselves in that position when there is a much more effective alternative?”
