How do UK rental deposits stack up against other nations?
One of the biggest hurdles for renters to overcome when trying to secure their home is the deposit. Depending on where you are in the country and who your landlord is, this could potentially run into the thousands.
Rental deposit replacement scheme, Ome, has compared the average cost of a rental deposit in the UK with 14 other nations who have the highest percentage of renters across the world.
Ome looked at the wide variety of rental deposit calculations across 15 nations and what this meant financially for tenants.
In England and Wales, the average tenant currently pays £1,139, although across the UK this is marginally more affordable at £811. The latest changes as a result of the tenant fees ban means that landlords and agents can now only charge five weeks’ rent as a deposit (where the annual rent is less than £50,000). While this might still seem high, there are tenants around the globe with a much larger financial obstacle in front of them.
In Japan where 38.3 per cent of the population rely on renting, tenants are required to pay an eye-watering 10 months rent as a deposit, meaning that the average tenant is required to find an upfront cost of £6,145.
In Denmark, deposits are based on three months’ rent, with a further three months paid upfront, this, therefore, costs the average tenant £4,432 to secure a property.
Like Japan, South Korea also requires tenants to pay 10 months’ rent as a deposit, costing £4,360 on average.
Across the pond, US tenants face paying as much as three and a half months’ rent upfront (£3,547). However, in 24 of the 51 states, there is no statutory limit on security deposits and in these states, landlords and agents can legally charge whatever they see fit.
Switzerland is the fifth most expensive nation in terms of rental deposits and the only other nation to see the average tenancy deposit exceed £3,000 on average. Swiss tenants are required to pay as much as three months’ rent to secure a rental property, coming in at an average cost of £3,542.
Germany (£1,860), Austria (£1,839), Israel (£1,598), Canada (£1,488), Australia (£1,269) and France are also home to some of the highest proportion of renters and an average tenancy deposit higher than that found in the UK.
In fact, just New Zealand (£743) and Turkey (£527) are more affordable and in Sweden, it’s common practice to take no rental deposit at all!
Matthew Hooker, Co-founder of Ome, commented: “Affordability is an emotive word that implies whether or not someone can have the product or service they want. When you compare renting in the UK with other countries our deposits are actually “more affordable”, however, that doesn’t help our squeezed renters feel any better. The reality is that renting in the UK can be expensive. Saving up your first months’ rent and paying the five weeks’ deposit means moving home can set you back 10 weeks’ worth of rent – excluding moving costs! And that can be all whilst waiting for your previous deposit to be given back to you.
Unfortunately, it’s not as easy as renting without any sort of deposit or security. Look to the Swedes, whilst they do not use deposits they do have central registers of tenants and rent payment histories to protect landlords. Landlords need security to feel comfortable letting someone else live in one of their largest assets. That’s why, at Ome, we’re focusing on how we can provide the landlord with the exact same financial protection as a cash deposit, whilst reducing the upfront costs to tenants when moving home to improve their day-to-day cash flow and rental wellbeing.”