The latest research from Zero Deposit, the tenancy deposit alternative, has revealed that renters are turning to their savings pots and the Bank of Mum and Dad in order to cover the high cost of securing a rental property, while a shortage of suitable rental stock also continues to pose a significant obstacle.
Zero Deposit surveyed over 1,000 current tenants and found that the high cost of rent and the resulting rental deposit continue to be the biggest obstacles to overcome when attempting to secure a rental property.
According to Zoopla, rental affordability is now at its worst in the last decade, driven by the increasing cost of renting. Zero Deposit found that the cost of renting and the resulting deposit required to secure a rental property – often set at five weeks asking rent – ranked as the biggest issue for almost half of tenants (49%) when searching for their most recent rental property.
But it’s not just affordability that tenants are struggling with. 22% stated they struggled to find a rental property within their desired location, while 17% couldn’t find a property of a suitable size.
Other factors such as credit checks, additional fees and referencing were less of an issue.
When it came to the upfront cost of a rental deposit, 54% stated that they had to dip into their savings in order to cover the cost. In doing so, not only are they depleting their hard earned nest egg, but they are also losing out on the interest that this money would have accrued, particularly in the current climate with interest rates increasing substantially over the last two years..
However, almost half (46%) of those surveyed required additional financial help.
15% had to rely on the Bank of Mum and Dad, while 11% were forced to wait for their previous rental deposit to be returned from their letting agent or landlord. Others turned to loans (6%), credit cards (5%), overdrafts (5%) and even sold personal items to raise the funds (4%).
What’s more, a quarter of those surveyed (26%), had to delay their decision to move because they didn’t have the upfront cost of a rental deposit accumulated, with 21% missing out on the property they were interested in as a result.
The majority (37%) of those who experienced delays had to wait a month, although almost a quarter (22%) had to wait more than six months.
As a result, over half (55%) of those surveyed stated that their current rental property is not their ideal home.
Sam Reynolds, CEO of Zero Deposit said, “The rental market is an extremely tough place to be at present, with tenants facing the worst affordability crisis in the last decade. This is due to consistently high demand coupled with a lack of suitable stock, which has only driven asking rents higher and higher.
Those who can afford to make their move face a very high level of competition when it comes to securing a rental property, but if they can’t act immediately, the chances are they will miss out.
The high cost of an upfront rental deposit is the driving factor that prevents many tenants from securing their desired rental property. While some are lucky enough to rely on savings or the Bank of Mum and Dad, others are putting themselves in further debt at a time when the cost of borrowing has grown considerably.
Many more are often left waiting for a previous deposit to be returned which can considerably delay their onward move, the result of which is that they miss out on the home they had intended to move to or at worst, are forced to further compromise to find a home. This compromise often comes in the form of settling for a much smaller property than they would have otherwise liked, either due to stock availability, or in an attempt to cut costs.”