Member Article

Doubling deposits would “price people out of properties”

· Deposits rise by 25% since 2007 –as wages fall 3% in same period

· Average North East tenancy deposit now £600

A leading property expert has poured scorn on proposals for landlords to charge new tenants higher deposits - arguing they would “price people out of properties”.

The Association of Independent Inventory Clerks (AIIC) this week recommended letting agents and landlords significantly increase the deposits they charge new tenants to cover the costs of damage to their properties - despite their own research showing that deposits have already soared by 25% since 2007. Ajay Jagota of sales and lettings firm KIS called the suggestion “a really great idea, assuming your plan is not having any tenants”. The AIIC reported that the average tenancy deposit now stands at £1198, up £304 from £894 in 2007.

The cheapest average deposits are found in Yorkshire and Humber, with new tenants having to fork out just £593. North Eastern deposits are second lowest at £603.

The AIIC warned deposits are often insufficient to cover the costs of problems common when tenants come to check out of tenancies, such as repairs to carpets, bathrooms and fixtures and fittings.

Research from the National Landlord Association this week revealed that just over a quarter of landlords (28%) have had their property damaged by tenants in the last 12 months.

Property expert Ajay Jagota, founder and Chief Executive Officer of the North East’s most innovative sales and lettings business KIS dismissed the recommendations.

The firm is famous for being the first letting agents in the UK to abolish deposits, replacing them with a one-of-a-kind landlord insurance policy offering deposit replacement guaranteed rent, legal assistance and round the clock third party emergency home repairs.

Ajay siaid: “The sad thing is, the AIIC’s analysis is pretty much on the money. A standard deposit will almost never meet the cost of any serious damage to your home or any legal fees you’ll ever incur as a landlord. You may as well not bother.

“Unfortunately, their recommendations are only a really good idea assuming your plan is not having any tenants.

“Figures from the Office of National Statistics recently showed that the cost of living is currently rising four times faster than wages. Other reports suggest wages will fall in real terms for at least the next three years.

“With deposits already up by a quarter over the last 7 years, even an extra £150 would mean deposits all but doubling in less than 10 years. With wages down 3% in the same period, all you’d be doing is pricing people out of properties.

“All you want as a landlord is to find and keep good tenants. So why make it harder? That’s why KIS abolished deposits altogether.”

KIS manage properties for landlords in every corner of the North East from branches across Tyne and Wear, and were named Letting Agent of the Year in the 2013 Landlord and Letting Awards. The firm expanded into residential sales in 2014.

This was posted in Bdaily's Members' News section by Ajay Jagota .