Cost of rental deposits 'likely to keep shooting upwards'

Updated: 

The cost of raising a deposit to rent a home is set to balloon for Britons in the coming decade, a report warns.

The average rental deposit required is expected to grow by around 40% by 2026, to hit £1,111, according to figures compiled by the Centre for Economics and Business Research (Cebr).

The projected increase is around twice the rate of expected growth in the average monthly salary, at 20%.

Tenants may increasingly find that the struggle to get a rental home presents similar cost challenges to buying a property, according to the findings. 

The cost of a deposit would swallow up around 70% of typical monthly earnings, according to the figures compiled for financial comparison website money.co.uk.

In London, Cebr predicts the average rental deposit will be £2,733 by 2026, equating to more than a month's salary, at 120%.

In Scotland, the average rental deposit demanded is expected to hit £947, equating to 60% of tenants' monthly salary, while in Wales the typical deposit put down is projected to reach £731, equating to just over half (51%) the average monthly wage there.

Landlords have traditionally asked for four weeks' rent as a deposit. But the report estimates that based on recent trends, with people increasingly seeing renting as a long-term option, by 2026 more than two-thirds (68%) of deposits requested will be at least six weeks' rent.

Cebr used a combination of sources such as the Office for National Statistics (ONS) to make its calculations.

Hannah Maundrell, editor in chief of money.co.uk, said: "The current booming property market means deposits are likely to keep shooting upwards in the future, and we could well see six weeks' worth of rent extended to eight."

Here are the average rental deposits and the percentage of monthly earnings these will take up in 2026, according to predictions from Cebr:

:: North East, £795, 55%

:: North West, £808, 56%

:: Yorkshire and the Humber, £797, 55%

:: East Midlands, £842, 56%

:: West Midlands, £857, 59%

:: East, £1,097, 71%

:: London, £2,733, 120%

:: South East, £1,469, 83%

:: South West, £1,149, 80%

:: Wales, £731, 51%

:: Scotland, £947, 60%