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Lettings: What Is An Acceptable Deposit?

 
 
 
 
  16 Apr 2018

Letting a property can be quite expensive and there are several initial costs to consider. The initial costs associated with buying property are well documented, with the mortgage deposit being a major issue for many prospective buyers. Tenants also must contend with a deposit and this sum of money may impact on the ability to find the right property. At Jezzards, we understand that there is a wide range of opinions on what is an acceptable deposit, and we will try and lay-out some of the opposing views.

While it looks as though the Government will provide a six-week cap on deposits, the Housing, Communities and Local Government Committee believes that a five-week cap would be the best level. You can see why tenants would prefer to pay less money as a rental deposit if they can, but landlords are intimating that six-week is the lowest they are willing to consider.

If a five-week cap is imposed on deposits, there is a strong chance that some landlords will adjust who they are willing to let to. As an example, the National Landlords Association, the NLA, has pointed out that a five-week deposit cap would see many landlords unwilling to let to tenants with pets. This is because they believe that this sum would not be sufficient to cover the cost of repairing pet damage.

Knowing that a deposit cap could lead to some potential tenants being left out of the market is a concern, and therefore, this is a topic that is still being debated and discussed. When it comes to an acceptable deposit, a lot depends on what the tenant is willing or able to pay, and as you would expect, the deposit for property in London could become very expensive

How much could a tenant pay for a deposit in London?

According to the home.co.uk site, the average rent in London is £2,945 per calendar month which equates to £575.75 per week. The size of deposit with a five, six and seven-week limit in London is listed below:

  • A five-week cap would carry a deposit of £2,878.75
  • A six-week cap would carry a deposit of £3,454.50
  • A seven-week cap would carry a deposit of £4,030.25

With a tenant also likely having to pay their first month’s rent up-front and pay for removal costs, the cost of moving into rented accommodation can be very expensive. Of course, London costs are not typical and tenants in other areas will not have to pay as much money. As an example, in Ashford in Kent, the average rent per calendar month, according to the home.co.uk site, comes in at £783 per calendar month, or £180.70 per week.

London is not typical in the UK lettings market

The following information outlines how much of a deposit a tenant may have to pay for a deposit in Ashford in Kent:

  • For a five-week cap, the average deposit would be £903.50
  • For a six-week cap, the average deposit would be £1,084.20
  • For a seven-week cap, the average deposit would be £1,264.90

With respect to Ashford in Surrey, the TW15 postcode, the average rent per calendar month, according to the home.co.uk site, comes in at £1097 per calendar month, or £253.15 per week.

London is not typical in the UK lettings market

The following information outlines how much of a deposit a tenant may have to pay for a deposit in Ashford in Kent:

  • For a five-week cap, the average deposit would be £1,265.75
  • For a six-week cap, the average deposit would be £1,518.90
  • For a seven-week cap, the average deposit would be £1,772.05

While the sums of money associated with a deposit in these locations are nowhere near the level a tenant would have to pay in London, they may still represent a challenge to tenants. It is important that people remember what value for money for them is, may be a difficult amount of money for someone else, so it is vital that tenants consider their own finances and budget before making a commitment.

These are significant sums of money that would need to be found in advance of renting property, so you can see why many tenants are under considerable pressure. Obviously if all goes well with the property, this deposit will be returned at the end of the tenancy, but the money must be provided in the first place.

No matter what position you have with respect to rental property, it makes sense to get help from the experts. If you are looking to make a move and you need some guidance, contact Jezzards today on 03330 433 633 and we will be more than happy to help.


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Jezzards Estate Agents



 

 

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