Tenancy deposit cap cut costs for tenants in England and Wales

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The average tenancy deposit paid to landlords has dropped steadily since the start of the pandemic and the introduction of the deposit cap.

New research by mydeposits reveals that tenants paid an average of £948 in 2011, rising to a peak of £1,108 in 2019. This dropped 6% to £1,040 in 2020 and a further 1% to £1,025 in 2021, meaning that landlords now have less money to cover damage or tenants who disappear without paying rent arrears. However, the cost of a tenancy deposit is still some 8% higher than it was a decade ago as the cost of renting has also climbed by £202 per month (30%). 

Total deposits rise

The figures show that there’s been a 91% increase in the value of deposits protected across England and Wales; from 2.2 million deposits with a total estimated value of £2.1 billion in 2011, up to £4.3 billion in 2021 and more than 4.2 million deposits.

Eddie Hooker, CEO of mydeposits, says the hurdle of a tenancy deposit remains considerably higher than it was in 2011. “The good news is that it has started to fall since 2019 and the introduction of deposit caps, which have ensured that any sums charged don’t exceed the five to six-week thresholds set by the government. Of course, the pandemic has also played a part with rental values falling in many areas, thus reducing the deposit charged based on these thresholds.” 

Downward trend

Hooker adds that it’s looking increasingly likely that rental market values may once again start to climb in 2022, which could reverse the downward trend seen in the cost of a tenancy deposit. “Fortunately, tenants have more choice now especially with the introduction of initiatives such as Ome, our deposit replacement product and landlords are increasingly being flexible in offering these alternatives.”

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