According to the research, the cost of living is currently rising at a rate of 1.6% a year in the UK, so a national average tenancy deposit of £1169 will be worth £19 a year less in real terms at the end of a standard two-year tenancy – a loss of £38 to the renter.
However, those who rent in the capital are left worst off, with their deposit of £2499 losing £76 in value over the course of a two-year tenancy.
With the average person buying their first property at the age of 31 an average renter stands to lose the equivalent of £204 from the value of their deposit before becoming a home owner – rising to £420 in London.
Deposits in KIS’ native North East are currently losing £13 of value a year, with renters in the region standing to lose £124 over the course of a decade.
The same amount of money invested instead in a saving account at an annual interest rate of 3% meanwhile would have earned an average renter £355 in the same period - £670 in London and £246 in the North East. This would mean a London renter losing out on £1090.
Ajay Jagota, anti-deposits campaigner and founder of KIS and Dlighted responded to the figures: “In 97% of cases landlords and letting agents return deposits to their tenants untouched, but inflation means the cash they get handed back isn’t worth the same as the cash they handed over. That might only mean renters losing a few pounds a year – but over the course of the decade the majority of people live in privately-rented housing it all adds up. And when you compare those loses to the money they would have earned by investing that money in a modest savings account they’re left hundreds of pounds worse off – or in the case of Londoners, thousands of pounds worse off.
Our estimates are of course a little rough as without a crystal ball we’re working on unlikely premise that rents continuing to rise at their current rate of 3% a year and inflation staying unchanged for the next decade – but the point stands.
When more than nine out of ten deposits end up being utterly unnecessary, what is the point of them, especially when they’re costing faultless renters a considerable amount of cash.”
