Renters borrowing more to pay for deposits

Renters borrowing more to pay for deposits

0:01 AM, 25th April 2024, About 2 months ago 1

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A growing proportion of renters in the UK are having to borrow money to pay their rental deposit, research reveals.

The findings from Reposit found that 38% of renters are turning to credit cards, personal loans, overdrafts, or friends and family.

The deposit alternative provider says the figure has increased by 8 percentage points in the last year – which coincides with a 10% rise in average monthly rents to £1,088.

The average five-week cash deposit now stands at £1,256, leaving many tenants struggling to find this large sum.

‘Tenants who can produce a five-week cash deposit’

The firm’s chief executive, Ben Grech, said: “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.”

Rising mortgage rates which have impacted landlords’ repayments

The firm says that rising mortgage rates which have impacted landlords‘ repayments means that tenants are also being affected.

It found that the rise in rents has pushed the average five-week cash deposit to £1,256 – which many renters are struggling to pay.

The survey of 1,000 tenants found that 20% of renters are using credit cards to pay their cash deposits, and 15% are borrowing from friends or family.

Also, 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.


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Comments

Cider Drinker

9:08 AM, 25th April 2024, About 2 months ago

If people are struggling to pay deposits and rent, how would they afford a new roof, a new boiler or any one of the numerous other things that homeowners need to fund, often at short notice.

When I was younger, I’d borrow money for essential items such as a new boiler or a car. Borrowing for something essential allowed me to justify the borrowing to myself. In truth, had I not spent so much on nights out, I would never have needed a bank loan.

So, was my borrowing really for a new boiler or car or was it to retrospectively replace the savings I could have had?

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