New research reveals that traditional tenancy deposits barely cover the cost of the most common causes of damage to rented homes.
A survey by interior design firm Hillarys suggests the main reasons for landlords or letting agents withholding deposits at the end of a tenancy are:
- Broken furniture – 29%
- Marks on the walls – 24%
- Carpet stains – 21%
- Need for redecoration – 12%
Analysis from deposit-free renting solution Dlighted and sales and North East-based lettings firm KIS shows that a standard tenancy deposit barely covers the costs landlords face when getting a property ready for new tenants.
With the current average North East rent of £576 per calendar month, the figures show that a traditional tenancy deposit equivalent to one month’s rent would cover:
- 78% of the cost of re-carpeting a single room (source: Which?)
- 73% of the cheapest available four-seater dining room tables (data from five leading furniture suppliers)
- 64% of the cost of the cheapest available three-seater sofa (data from five leading furniture suppliers)
- 61% of the cost of redecorating one standard room (source: Which?)
Research from the Residential Landlords Association meanwhile has revealed that 28% of landlords have experienced rent arrears in the past 12 months.
Ajay Jagota, founder and managing director of Dlighted a Proptech company that delivers a Deposit replacement insurance solution which is an alternative to the cash Tenancy Deposit schemes TDS, DPS and Mydeposits.
Dlighted’s deposit free landlord insurance system protects landlords against property damage, rent arrears and legal fees.
He said: “Tenancy deposits lull landlords into a false sense of security when it comes to protecting their assets. These figures couldn’t be clearer – if as a landlord you suffer just one of the most common causes of tenant, your deposit may not be enough to put things right. If you have more than one, you’re going to be seriously out of pocket.
“This is before we consider the issue of rent arrears, which could affect nearly a third of tenancies. Your deposit means you can afford to have your tenant do a midnight flit owing you a single month’s rent. What happens if they owe more than that? And that’s before we get to locksmith charges and legal fees.
“In every other conceivable walk of life people put their trust in insurance schemes to protect their assets. It’s bewildering that buy-to-let landlords continue to think differently – especially as it clearly isn’t in their financial interests to do so.
“Deposit fee renting doesn’t just make it easier to find and retain good tenants; it’s better for landlords’ wallets too.”