Increases to rental deposits dwarfed by other costs of living

The increasing price of rental deposits that tenants are paying in the UK has grown at a far slower rate than many other costs of living over the last five years, new data from Hamilton Fraser’s deposit replacement provider, Ome, has revealed.

Ome’s research showed that current tenants are paying average rental deposits of £1,139 – a 5% increase compared to the £1,088 being paid in 2014.

When considering the cost of a deposit compared to the inflation of other everyday costs, however, Ome indicated that its figures showed deposits had increased at a lower rate than many other costs of living – and suggested the issues of cash flow surrounding renting stretched further than the deposit itself.

While the cost of renting has increased, the research revealed the cost of buying a home had seen the second largest increase in the last five years, which was up 24% to the current average house price of £231,265.

Ome highlighted it was the cost of a basic pay TV package – which has increased from an average of £22 to £28 in the last five years – that reflected the largest increase, at 26%.

Over the same period, Ome also revealed the average UK salary had increased by just 12.4% and suggested that many other costs of living had grown at larger rates – although Ome further emphasised that rental deposits were not amongst this group.

“The rental sector has received a fair share of negative press in its time and much of this has been focused around the traditional deposit, and the sums charged by agents at the start of a tenancy, in order for a tenant to secure a property,” Ome co-founder, Matthew Hooker, commented.

“It would seem that it is the cost of living within a property itself that is putting the greatest financial squeeze on the nation’s tenants, with the actual deposit only proving a problem for those unable to accumulate the large initial sum, or finding themselves short for other areas of life once they have.

“Of course, many of these other costs are either small or provide the option to pay in instalments, with the deposit being the last major cost that can’t be widely tackled in bite sized chunks. That’s why we’ve seen a number of deposit alternatives enter the market in order to provide this choice and allow tenants to stay on top of the climbing costs elsewhere in life, by opting to pay their rental deposit on a more manageable monthly basis.”

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