While there is a considerable amount of focus on the up-front costs associated with buying property, and how this can be harmful to people looking to step on to the property ladder, there is not as much focus on the initial costs associated with renting. However, for prospective tenants, the challenges posed by these upfront costs are just as daunting as a mortgage deposit for prospective buyers. The level of acceptable deposit that a tenant should pay is currently being debated and there is a disagreement between MPs and landlords.
The Housing, Communities and Local Government Committee believes that the deposit should be capped at a level equivalent to five weeks’ worth of rent. At this point, the latest update from the Government is that they intend to set the deposit cap at the equivalent of six weeks’ worth of rent.
Landlord groups would likely accept a six-week deposit cap as an acceptable deposit
Groups represent landlords have stated that a cap of six weeks’ rent is a realistic option, but any lower cap could reduce the likelihood of some tenants finding suitable accommodation. One example of a group of people failing to find rental accommodation with a lower cap is tenants with pets, and this problem has been cited by the National Landlords Association, or the NLA.
The issue of whether a landlord should accept pets into their property or not is an entirely different matter, but there is an acceptance that many landlords are only willing to do so with a larger deposit, which would pay for damages or the cost of removing the pet smell from the home. Pet lovers will cite that many people make more of a mess and show more disregard for property than animals, but from a professional viewpoint, it is no surprise to learn landlords would look for more financial backing from these tenants.
The Government was initially calling for just four week’s rent to be used as deposit but as closer inspection is made of the draft Tenant Fees Bill, the cap looks more likely to be set at five or six weeks’ worth of rent.
How much should a rental deposit in Petersfield be?
According to information provided by the home.co.uk website, the average rent in Petersfield stands at £916 per calendar month, which equates to £229 per week. At the various level of deposit cap being discussed, tenants in Petersfield would be expected to pay the following deposits:
- With a four-week cap, the average deposit would be £916
- With a five-week cap, the average deposit would be £1,145
- With a six-week cap, the average deposit would be £1,374
- With a seven-week cap, the average deposit would be £1,603
When you think of the fact that many tenants must pay their first months rent in advance and will often have removal costs, the scale of deposit may be enough to persuade a tenant not to rent. Of course, there will be tenants who have no option but to rent, and the cost of the acceptable deposit may still cause the tenant financial discomfort or hardship.
The issue of deposit caps is clearly a challenging issue and both landlords and tenants have valid points in the discussion. At Williams of Petersfield, we appreciate that landlords and tenants have their own interests, and we hope that an acceptable deposit decision can be made that suits all parties. If you are looking to make a move in Petersfield, you will find that we are always happy to help so get in touch and we will do what we can to assist you.