Nearly four out of 10 renters are turning to friends and family, using credit cards, personal loans or dipping into their overdraft to cover the costs of moving home, latest research from Reposit reveals.
The figure is up from three in 10 a year ago during which average monthly rents have risen by 10% from £990 to £1,088.
This follows increases in mortgage rates which have significantly impacted landlords’ repayments and consequently affected tenants.
RENTAL COSTS
Ben Grech, RepositBut the rise in rental costs has forced the average five-week cash deposit up to £1,256 – a lump sum many tenants struggle to find.
And now a fifth of renters are using credit cards to fund their cash deposits, 15% are borrowing from friends or family, 12% are dipping into their overdrafts and 8% are using personal loans. In some cases, renters are using more than one of these sources to fund their deposits.
Ben Grech, Reposit Chief Executive, says: “There’s a misconception that tenants who can produce a five week cash deposit of £1,200 are more financially reliable than those who would prefer not to commit this large amount of money.
“However, this is not the case because as our survey shows, almost 40% of tenants are borrowing money for their cash deposit.
“Assessing affordability therefore is best carried out by quality referencing and checks by specialist providers.”
He adds: “Deposit alternative products can provide financial breathing space, particularly for tenants who are caught up in saving for a cash deposit while waiting for the return of their previous one.
“The products can also alleviate the financial pressure during the current cost of living crisis which has seen rents increase by 10% in one year.”
