Renters are spending half their wages keeping a roof over their head, are twice as likely as homeowners to have no savings and are spending thousands on tenancy deposits – putting home ownership out of reach for millions
Property campaigner Ajay Jagota believes a simple solution would be to let renters put their tenancy deposits into savings accounts – with their landlords better protected with insurance policies.
University of Bristol research has discovered that 33% of private renters have less than £100 in the bank, compared to 14% of mortgage holders.
The University’s Financial Wellness report also estimates that private renters spend half their monthly income on rent – although research from North East sales and lettings firm KIS suggests this figure falls to just 28% in the region.
The report also estimates that 20% of renters have to cut back on their food in order to pay the rent, with 14% having to borrow money from friends or family and 8 % forced to sell possessions to raise cash.
Tax changes coming into effect into April – including alterations to stamp duty, changes to mortgage interest tax relief and the scrapping the wear and tear allowance – may also force up rents, putting home ownership even further out of reach for first-time buyers.
Ajay Jagota is the founder of the Protech Deposit replacement insurance solution Dlighted which is an alternative to the cash Tenancy Deposit schemes TDS, DPS and Mydeposits’
He said: “Housing Minister Gavin Barwell stated when he launched the Housing White Paper recently that there is ‘no silver bullet’ when it comes to solving the housing crisis – but on this issue there really is.
“Renters don’t have savings and half their money goes on rent so first-time buyers clearly need help saving for deposits. A simple start would be to let them put the money they are currently putting into tenancy deposits into a savings accounts instead.
“Gavin Barwell recently admitted to the House of Commons that 98% of deposits are handed back uncontested. That’s £3.1bn of renters money needlessly locked away when it could be being put aside for a home of their own.
“Landlord insurance provides property investors with much more comprehensive protection. At the same time a tenancy where renters are getting into debt, selling off their stuff and going without food to pay the rent clearly isn’t a sustainable one, so why would landlords put themselves in that position when there is a much more effective alternative?”