A scheme in London offering workers an interest free loan to pay for their deposit on a rented home is being rolled out across the country.
The scheme was pioneered by housing and homelessness charity Shelter and the Mayor of London last year. The Department for Communities and Local Government is the first in Whitehall to adopt the initiative and secure cross-Government support to introduce it.
It is backed by housing minister Brandon Lewis and works like the season ticket loan programme already offered by many employers to help commuters pay for their travel costs.
At an event to roll out the scheme today, it was announced that The Co-operative Group will be the first major employer to offer it to their 70,000-plus employees across the UK. The initiative is also being taken up by The Confederation of British Industry, London First and the London Chamber of Commerce, among others.
As housing costs put pressure on renters’ finances, the Mayor and Shelter are now calling on employers throughout the capital and the country to adopt the scheme.
Renters in England pay an average of over £1,200 for deposits when they move into privately rented homes, according to recent research. The sector has nearly doubled in the country in the last ten years and there are now more than 9 million renters nationwide.
The Mayor of London Boris Johnson said:
“Many people living in private rented accommodation are forced to borrow money to pay for their tenancy deposit and are put in debt before they have even moved into their new home. By rolling out this scheme nationally we will be able to ensure that employees can secure a home without enduring unnecessary financial difficulty. This is the latest part of my comprehensive strategy for the private rented sector and follows on from the London Rental Standard which was launched last year to help millions of Londoners rent with confidence."
Shelter chief executive Campbell Robb said:
“Finding the money to pay for a deposit shouldn’t stop someone from getting a home for their family, but as the cost of housing keeps rising, more and more people are struggling to do just that. That’s why, after we successfully piloted the scheme for our own staff last year, we’re now calling on employees across the country to do the same and help their staff move home without breaking the bank.”
Housing Minister Brandon Lewis said:
“With millions of people across the country renting their home we are determined to create a bigger, better private rented sector that is fair to tenants. Today’s move will mean thousands of people will be offered a helping hand to rent privately through season ticket style loans from their employers. I hope to see more employers in the public and private sector joining the scheme in the near future.”
The Co-operative Group Chief Executive, Richard Pennycook said:
"For colleagues looking to rent their own home, raising the money for a deposit can be a real stretch. We are delighted to offer this helping hand to our colleagues and fully support this initiative.”
The scheme was launched today at The Co-operative in St. Pauls, London. The event was attended by Housing Minister Brandon Lewis, Deputy Mayor of London for housing Richard Blakeway, The Co-operative Group Director of Resourcing and Diversity, Adrian Shooter, and Shelter chief executive Campbell Robb.
From left: Richard Blakeway - Deputy Mayor of London, Brandon Lewis - DCLG Minister, Gowsiya Raveendrarasa, Anuj Christi - Store Manager and Campbell Robb - Chief Executive of Shelter. Photo credit : Simon Jacobs.
While the scheme can be adapted by different employers to suit their needs, in principle, employees are offered interest-free loans to pay their deposits when they move into a privately rented home, which are then paid back through their salary over the course of up to a year.
For further information on the scheme, including details for employers on how to sign up, please email firstname.lastname@example.org.
Notes to Editors
- The Rental Deposit Loan Scheme works much like the season ticket loan scheme used by many employees. It offers staff an interest free loan to help employees pay their tenancy deposit when moving into a privately rented home. Repayments are then deducted from their monthly salary over a period of time, usually in in monthly instalments to repay the amount of the loan.
- Employers who are offering the scheme include Shelter, The Greater London Authority, The Co-operative Group, The Department for Communities and Local Government, London First, London Chamber of Commerce, Notting Hill Housing and Gerald Eve
- According to My Deposits (Q3, 2014) the average rental deposit size in England is £1,210, and £1,859 in London.
- The proportion of households that are renting privately in England has risen from 10% in the 2001 Census to 17% in 2011.
- The proportion of households privately renting in the capital increased by 62 per cent from 2001 to 2011 (Census, 2011)