PRS sees slowest tenant deposit growth in eight years

The number of rental deposits protected in government-authorised schemes across England and Wales climbed by only 82,000 over the past year, The Deposit Protection Service (The DPS) reveals.

It says this is the second time in eight years that growth has dipped below 100,000.

The figure stands in sharp contrast to 2017, when deposits surged by 270,000, highlighting a big slowdown in the expansion of the private rented sector.

The DPS, the largest protector of tenancy deposits, revealed the data in its Private Rented Sector Review, which drew on official data, and surveys of 1,100 landlords and 1,200 tenants.

The DPS report paints a picture of a PRS under strain, with tenants reluctant to relocate and landlords grappling with mounting pressures.

Landlords question PRS commitment

The organisation’s managing director, Matt Trevett, said: “Whilst the overall proportion of the population housed in the private rented sector (PRS) has remained static for the past decade, our report reveals a number of ongoing, significant trends inside it.

“More tenants who want or need to move are staying put, most likely owing to a lack of suitable or affordable properties – at a time when rents for most tenancy holders continue to increase.”

He added: “Our research also shows that concerns about legislation, taxation and interest rates are leading to a significant proportion of landlords to question whether it’s worth staying in the sector, which, in turn, could potentially also affect the number of rental properties available long-term.”

Growing landlord discontent

The DPS report reveals growing discontent with more than half (52%) of landlords surveyed admitting to considering selling some or all of their properties, a five-percentage-point rise from October 2024.

Of those, 25% are seriously contemplating leaving the market entirely within two years.

The reasons are clear: 89% point to changes or proposed changes in legislation as a key factor, while 74% said post-tax returns no longer made renting viable, figures unchanged since October 2024.

Tenants have limited rent options

The report also highlights that while 36% of tenants surveyed expressed a desire to move in the past year, only 16% actually did, which is probably down to limited affordable options.

Among those tenants who relocated, 46% reported rent rises of 11% to 30%, while 14% saw rises of up to 10%.

For tenants facing higher rents, 45% noted increases of up to 25% compared to the previous year, and 9% reported even steeper hikes exceeding 25%.

The data also showed that half of the tenants surveyed had been renting for one to five years, a slight drop of five percentage points since October 2024.

The largest group of renters, 46%, were aged 35 to 55, consistent with figures from March and October 2024.