How the cost of living crisis has altered the demand for deposit alternatives
As the UK economy faces a period of uncertainty marked by a cost of living crisis and soaring inflation rates, the rental industry is arguably one of the most impacted sectors. Renters are allocating a third of their household income on rent, the highest percentage spent on any tenure type.
There is little evidence to suggest this will ease, as the reported 10% year-on-year increase to rents in July represented the largest increase since the statistics body began tracking rents in 2016 and shows little sign of retracting.
Renting a home has long been associated with the burden of finding a substantial upfront deposit, amounting to 5 weeks' rent, which can be a significant obstacle for individuals seeking housing during times of financial hardship or restricted cash flow. Particularly when combining the upfront payment of the first month's rent in advance. Even if tenants can find the deposit, many would prefer the choice of holding on to the bulk of their cash, a choice that still far too many are not provided.
flatfair’s No Deposit solution offers this choice and eases the financial strain for tenants at the start of their tenancy, replacing a 5 week traditional deposit with a one-off cost of one week’s rent (+VAT), while doubling landlords’ protection.
Towards the end of 2022, flatfair released its latest rental solution, flatfair Deposits. This service allows agents to manage all deposit types in one platform, ensuring tenants have the choice of a traditional deposit or flatfair No Deposit.
During the months of October and November, No Deposit accounted for less than a quarter of plan sales from partners using Deposits. However, these figures have now risen to over 50%, showing a growing appetite for upfront savings to aid cash flow amidst the rising cost of living.
flatfair CEO, Gary Wright said: “The surge in demand for deposit alternatives coupled with the importance of offering a choice means we are seeing many of the biggest names in the industry such as Beals, Boydens, Breckon & Breckon, Castledene, CGT, and Dawsons Property adopting flatfair Deposits, with many more partners in the process of signing up. This is an important step in our mission to make renting better and fairer for all."