The typical deposit a tenant has to pay when moving in to a new home in England and Wales is moving ever closer to the £1,000 mark, new research from the Deposit Protection Service (DPS) has revealed.
Fresh data from the DPS, which has been entrusted with more than 3.2 million deposits since launching in 2007, shows that those taking out a new tenancy during the second quarter of the year had to pay on average £970.48 as a deposit when moving in, up 4.5% compared with the £948.31 deposit required in Q1.
At an average of £1,799.11, properties with London postcodes commanded the highest deposits – usually equivalent to one or two months' rent – in the country, replacing Kingston-upon-Thames’ ‘KT’ postcode, which had been the most expensive between January and March, at an average of £1,682.85.
Properties with Durham’s ‘DR’ postcode were the cheapest in the country, with new tenants having to submit £467.76 as a tenancy deposit, which offers a level of protection to landlords and means that should the tenant breach the terms of the tenancy agreement, such as causing damage or not paying rent, you, as the landlord, can then make appropriate deductions from the deposit.
“Tenancy deposits give landlords peace of mind when they rent out property, but they are usually large sums and are often the most financially demanding aspect of moving house,” said Julian Foster, managing director at the DPS.
Deposits taken on assured shorthold tenancies in England and Wales by landlords or letting agents must be protected within 30 days in any one of three government-backed insurance based or custodial deposit protection schemes operated by MyDeposits, Deposit Protection Service (DPS) and the Tenancy Deposit Scheme (TDS).
The insurance product enables landlords or agents to retain the deposit during the tenancy but in return pay a protection fee to the scheme.
The custodial scheme allows landlords or agents to hand over the deposit for protection during the tenancy, with no fees attached. The scheme is funded entirely from the interest earned from the deposit pool.
There are separate tenancy deposit protection schemes in Scotland and Northern Ireland.
The three appointed scheme administrators in Scotland are Letting Protection Service Scotland, Safedeposits Scotland and MyDeposits Scotland.
In Northern Ireland, the schemes are Deposit Scheme Northern Ireland, MyDeposits Northern Ireland and Letting Protection Service NI.
Foster added: “When landlords protect the money with The DPS, renters can also be assured that their money is safe throughout their tenancy, and that they’ll have recourse to free, impartial adjudication if there is a dispute when they move out.”