Rental Deposits – The Bad News and the Good

Published: 08/05/2018

Putting away money to save is hard, especially if you’re a young graduate in your first job. Even harder then is trying to find the deposit for your first home. The ideal is of course to be able to stay with your parents while you save up enough money for a deposit. This isn’t always possible though. Many young people must rely on their parents to help them out or go into debt by using loans or credit cards.

If you want to rent a property then you must have enough money to cover the first month’s rent, the deposit and sometimes rental fees. For some the deposit means saving up another month’s rent, but some landlords charge more.

The tenancy deposit scheme has said that the average deposit in England and Wales for a rental property is around £1,041. But in London it can be as much as £1,750. That means first time renters must have just under £4,000 to pay the rent and the deposit if they are in the London area.

But, in the future the costs might be less. The government plan to bring in two new laws in the spring of 1919. The first one is to ban fees charged to tenants by landlords or letting agents. This will enable prospective tenants to get a clear picture of the cost involved in renting. There won’t be any surprises introduced during the rental process. At present, rental fees can add on £200 or £300 to the cost of a new tenancy. If rental fees are scrapped, then this is money a tenant won’t have to find.

The government also hope to have the draft Tenant Fees Bill passed next year. This will put a cap on deposits at no more than 6 weeks rent. It isn’t the one-month deposit cap many people were hoping for, but it will stop landlord’s from asking for more.

Meanwhile, if you are looking for money for a deposit, stay away from pay day loans. It is doubtful you will be able to pay back such a large sum quickly. It means you will end up paying a high rate of interest.

Talk to your bank who may be willing to give you a loan. Alternatively, you can ask them for a credit card. Cards from your bank normally have better interest rates than cards from other sources.

If you must look for a credit card elsewhere use a comparison website like Money Supermarket. They have a credit card smart search that won’t affect your credit rating. You can see within minutes whether you will be successful applying for a card.

Once you’ve got a card make sure you never miss a payment. Try to pay off more than the minimum amount each month. This will reduce the amount you’ll pay in interest.