Major cities like London, Birmingham, Bristol, Manchester and Leeds to lose out on £3.1bn
Research by YouGov predicts that number of households living in the Private Rented Sector in the UK will grow by 24% by 2021 – depriving the UK economy of at least £5.8billion in tenancy deposits.
With the average UK tenant currently needing to stump up £967 in tenancy deposits before being handed the keys to a new property, the figures predict that 5.9m households will be renting privately within 4 years, removing an extra £2.3bn from the economy on top of the £3.5bn held in the bank accounts of landlords and letting agents and in tenancy protection schemes today.
Government plans to cap tenancy deposits at the value of one month’s rent – unveiled last week – will have no impact upon the figures.
Deposit reform campaigner Ajay Jagota described the figures as “the absolute scandal of wasting enough money to fill the funding gap in social care on literally nothing”.
The figures, which do not include any increases in rents which may occur over the next five years, show £3.1bn being lost to the economy in Britain’s biggest cities alone, including:
- £2.6billion in London
- £90million in Birmingham
- £69million in Leeds
- £68 million in Manchester
- £48million in Bristol
- £24m in Sunderland
- £18m in Newcastle
The survey also show that 37% f of tenants now rent out of choice rather than necessity – with renters naming the flexibility and fewer responsibilities of renting as principle reasons for them not purchasing properties of their own.
The figures, commissioned by property firm Knight Frank, also show that 68% of renters still expect to be living in the rental sector in three years’ time.
The Department of Communities and Local government’s most recent Housing Survey revealed that the Private Rented Sector has doubled in size since 2004, while homeownership has also fallen to its lowest rate since 1985.
Ajay Jagota founder of deposit-free renting solution Dlighted, campaigns for reform of the private rented sector and was one of the first commentators to predict deposit reform was on the government’s agenda, stating before the General Election “deposit reform is now unavoidably on the agenda… like it or not, deposit reform has arrived”.
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