London tenants pay high average deposits, claims supplier

One of the players in the controversial Deposit Alternative field is stepping up its case for this kind of service to be adopted by agents and landlords.

Deposit alternatives are under scrutiny at the moment following a statement from the Competition and Markets Authority that it would investigate the niche sector as it surfaced as an “area of concern” regarding consumer rights. Deposit alternatives have also been the subject of probes by The Observer newspaper and comment from the Citizens Advice charity in recent years. 

Now the Zero Deposit company has researched which postcodes suggest that tenants pay the most in terms of traditional deposits. 

The firm analysed the current cost of renting across every postcode of England and Wales before looking at what this means for the average tenant when it comes to the deposit required to secure a property at five weeks asking rent, or six weeks rent for tenancies of over £50,000 over 12 months.

The current average monthly rent across England and Wales is £1,294, meaning the average tenant is required to pay a deposit of £1,493. 

The SW7 postcode in Kensington and Chelsea sits top with the average deposit costing £6,792. Westminster’s W1 postcode isn’t far behind with the average rental deposit sitting at £6,659. 

The nearby SW1 and W8 postcodes are home to an average rental deposit cost of £6,182 and £6,167 respectively, while tenants looking to rent in Camden’s NW8 postcode will also have to stump up over £6,000 upfront. 

Just two postcodes make the top 10 outside of London, the KT11 postcode in Elmbridge (£4,662) and Runnymede’s GU25 postcode (£4,463) - both of which are located in the South East. 

Sam Reynolds, chief executive of Zero Deposit, says: “The cost of renting is often the largest outgoing many tenants will have, but it’s fair to say that the cost of a rental deposit poses a significant financial obstacle before they can even secure a rental property to call home. 

“For the average tenant this cost currently sits at almost £1,500 across England and Wales which is a sizeable sum in itself. However, depending on where you want, or need to live, a rental deposit is often far higher. 

“Tenants in London predictably face the highest cost but across the nation there are plenty of postcode pockets that will see you pay above the regional average and then some. In practice, renters have to make significant concessions to secure a property, often downsizing and significantly compromising on their must-haves.”