Scrap tenancy deposits to help first time buyers, urges agent

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.

That is the view of property campaigner Ajay Jagota who says a simple solution would be to let renters put their tenancy deposits into savings accounts, and for their landlords to be better protected with insurance policies.

The University of Bristol research has discovered that 33 per cent of private renters have less than £100 in the bank, compared to 14 per cent of mortgage holders.

The University’s Financial Wellness report also estimates that private renters spend half their monthly income on rent – although research from Jagota’s north east of England-based sales and lettings firm KIS suggests this figure falls to just 28 per cent in that region.

The report also estimates that 20 per cent of renters have to cut back on their food in order to pay the rent, with 14 per cent having to borrow money from friends or family and eight per cent forced to sell possessions to raise cash.

Tax changes coming into effect at the end of this week – 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, he says.

Jagota is the founder of the Protech Deposit replacement insurance solution Dlighted which offers an alternative to the cash Tenancy Deposit schemes TDS, DPS and Mydeposits’

“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” insists Jagota. 

“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?”

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    There is no surprise Jagota is suggesting 'no deposits', he wants the business! how does he thick a small deposit of £700 is going to grow to a deposit for a house purchase - he is in dream land.

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    Hello Paul, thank you for your comments however regardless of the "business" I actually believe it is the right solution.
    A "small" deposit of £700 placed in an HTB Isa or Lifetime isa, comes with the benefit of a government 25% top up grant at the time of purchase. A tenant who genuinely wants to get on the housing ladder is able to save a further £4,000 per annum, and I would suggest a tenant who is planning to get on the housing ladder would take greater care of their tenancy because if not it could affect their credit file!

    You and others may think the £3.5 Billion currently held in tenancy deposits is a good use of resources, however, I don't, and as a consumer, i wonder how you would react if any other sector adopted cash deposit in their process merely to mitigate risk?

  • jeremy clarke

    The concept could work but surely the tenant should be expected to pay the landlord's protection insurance and my guess is that if that type of policy becomes popular then more claims will be made and the cost will rise!
    Deposits from tenants are returnable, all the tenant has to do is look after the landlord's property pay rent and adhere to some basic requirements such as cleaning, makes it a brilliant savings scheme!
    What would be interesting would be to ask how many tenants, if they became homeowners, would let tenants into their new homes without the commitment of a deposit?
    It seems that more and more landlords are expected to invite tenants in with less commitment, once tenants fees disappear, I'm fairly certain that some landlords will take tenants at face value rather than spending money investigating credit and background; take away the deposit and you may as well leave the keys under the mat with a welcome sign on the door!


    As you have indicated referencing is crucial to the stability of tenants and the ability to pay a cash deposit is not!
    The claims frequency on Dlighted is 2% which is less than the claims made against cash deposits.
    The policyholder has cover against damage, rent and legals, which is more than you have when taking a cash deposit!

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    yet more nonsense towards Landlords.
    If we did not take deposits,tenants would have a none care attitude towards looking after the home.
    They don''t care now!even with a deposit.
    Ok don't have a deposit and I would add a £100 month to the rent to protect myself.
    I would also have to take out insurance (for what that's worth!) and charge the tenant.
    It's time the Landlords were treated better and not bashed everyday!
    Hightime Landlords could get out bad tenants,who don't pay their rent within a month! not months/years
    Hightime we can perhaps stop councils telling tenants not to move out,until the high court turn up!costing landlords even more money!
    We provide a roof over peoples heads and get no help or support,just bashing and taxed to death,
    We take the risks,put our own homes up to raise investment and just want to run a good business,yet all we get is bashing bashing,treated like criminals.Yes there are Landlords out there who want putting out of business,really bad boys!
    But I am talking about really good landlords,who do everything by the book(such as me)
    So really if you don't have anything to say ,that also looks after the good guys,just shut up !!!!!!!!!!!!!!


    I agree entirely and it seems that A J has very little work to do at the moment other than writing drivel trying to defend himself in a no win situation.

    As the man said A j - SHUT UP.

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    Once you understand Dlighted and the platform it is delivered on it covers all your points.
    Currently, when using cash deposits any tenants causing damage (after ADR) can move on with impunity to the next landlord/agent.

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    One of my x tenants did not pay the last months rent,I asked why? he said "I have paid you enough and am not paying the last payment !
    I kept the deposit and after claiming for damages,had to take him to court.
    He did not pay me a penny.
    Lucky for me,I found out he owned a house ! he now has a charging order on it and owes me bigtime!
    I advise all Landlords to fully investigate their x tenants who owe them money and take them to court.
    Double check ,as they may well own a property that you can get a charging order on,or send bailiffs to sieze property! dont give up !


    Or just take a homeowner guarantor.

    Ajay, you are an industry pain.

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    Hello Paul all of the above actions are covered on the policy - on a successful claim you would have been paid directly by the insurers whilst they proceed with a claim against the tenant.

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    Hello Paul all of the above actions are covered on the policy - on a successful claim you would have been paid directly by the insurers whilst they proceed with a claim against the tenant.

  • Hemi Tanna

    The reason that renters have less than £100 in the bank is because they don't have to worry about maintenance and repairs. Homeowners may have cheaper mortgages, but they have the added disadvantage of having to cover all repairs etc themselves. Rent does not just cover living in the house. It also pays for the service you receive from the Landlords and the convenience of having everything in the house done for you.
    You claim that the deposit scheme is holding back renters from buying and Paul Collins made the excellent point that £700 does not a house deposit make. You replied using figures where all the deposits in total was quoted - this does not help the individual tenant. Each tenant has individually a deposit - saying £3.5 billion being tied up is no good is not a response; are all the tenants going to bank their tenancy deposits together and buy houses?? This is about individual tenants and, I reiterate, a tenancy deposit will not cause any issue with saving for a house deposit.
    Finally, I agree that yet again, Landlords are being taken from and blamed. Homeowners have to pay product fees and valuation fees etc..the mortgage lender doing a valuation to agree to lend and the homeowner pays for it and DOESN'T GET THE MONEY BACK! Tenancy deposit is given back when they move, do homeowners get it back NO, they have to pay out again, just like tenants do.
    Overall, whether you own or rent there are costs. End of. Pay your costs for the choice you make for your housing and deal with your own finances to save for whatever reason you save for; go back to the old days and cut back on luxuries! Save the old fashioned way and not by taking from the people who are providing you with a service. Landlords are expected to do more for less return - whats the fairness in that?

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    Perhaps you are unaware of the following:


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