One in five tenants is struggling so badly with their finances that they have had to borrow money to cover their five-week cash deposit, says Reposit CEO Ben Grech (pictured).

Research conducted by the company found that 6% of those tenants borrowed £1,500 or more, 18% borrowed £1,000 – £1,500 and 24% borrowed between £500 and £1,000.

A previous poll Reposit found that 38% of tenants were relying on friends and family, credit cards, personal loans, or overdrafts to help cover their lump sum. However, not all of this debt was necessarily repayable.

Across all age brackets

The survey of 1,000 current renters shows tenants from across all age brackets and in each UK region were turning to credit to pay for their cash deposit, with the average deposit around £1,218.

Those borrowing most frequently were 18-34-year-olds, while those aged between 55 and 64 were the most likely to borrow the largest amounts of money, which is likely to be due to their higher rents. And women tended to borrow more than men.

The broad assumption still exists within the industry that being able to pay a cash deposit is an indication of financial stability.”

Grech says: “The broad assumption still exists within the industry that being able to pay a cash deposit is an indication of financial stability. Our research demonstrates that this is just a myth.

“In fact, tenants are borrowing money to be able to pay a cash deposit. This puts them in a more precarious financial position right before moving into a property – which is not at all what most landlords would want.

He adds that a tenant’s capacity to pay the monthly rent is best assessed by quality referencing and affordability checks carried out by specialist providers.

And he advises that, with the Renters Rights Bill looming, it is even more important to take those kinds of steps to mitigate the risk of rent arrears, potential evictions, and disputes.”