Tenants are being warned to take inflation into account when receiving their deposits back at the conclusion of a tenancy agreement.
New research from sales and lettings firm KIS has highlighted the impact of inflation on the value of tenancy deposits, with some renters being left as much as £420 out of pocket. Even in 97% of cases where deposits are returned untouched, tenants are still left short.
Rising rates of living
Data from the investigation shows that the cost of living in the UK is rising at a rate of 1.6% per year. Therefore, the average national tenancy deposit of £1169 will be worth £19 per year less in real terms at the conclusion of a two-year agreement.
Renters in the capital will be left worse-off, with typical deposits of £2499 losing £76 in value during a two-year agreement.
On average, a typical renter buys their first home at the age of 31. Taking this age as a guide, a tenant stands to lose the equivalent of £204 from the value of a deposit before becoming a home-owner. This rises to £420 in London.
Ajay Jagota, anti-deposits campaigner and founder of KIS, said on the figures, ‘in 97% of cases, landlords and letting agents return deposits to their tenants untouched, but inflation means the cash they get handed back isn’t worth the same as the cash they handed over. That might only mean renters losing a few pounds a year-but over the course of the decade the majority of people live in privately-rented housing it all adds up. And when you compare those losses to the money they would have earned by investing that money in a modest savings account they’re left hundreds of pounds worse off-or in the case of Londoners, thousands of pounds worse off.’
‘Our estimates are of course a little rough as without a crystal ball we’re working on unlikely premise that rents continuing to rise at their current rate of 3% a year and inflation staying unchanged for the next decade-but the point stands. When more than nine out of ten deposits end up being utterly unnecessary, what is the point of them, especially when they’re costing faultless renters a considerable amount of cash,’ he added.