As we found in last week’s blog, deposits have dropped for the first time in five years so we wanted to dive even deeper and find out how much of people’s salaries, depending on their profession, is spent on a rental deposit.
Through the Hamilton Fraser Groups database, we have looked at the current cost of a rental deposit and what this equates to as a percentage of the annual net salary across 20 UK professions, and how long it takes each profession to save the required amount.
We looked at the current average cost of a deposit paid across the Hamilton Fraser database and the annual net salary currently available across 20 professions to see how this initial financial hurdle varied depending on the career path.
Using the 50/30/20 rule, a financial rule of thumb whereby a person should budget 50 per cent of income towards necessities like bills, 30 per cent towards wants such as social activities and 20 per cent towards financial goals such as paying other debts or saving for retirement, we also looked at how long it would take each profession to save a rental deposit with 20 per cent of their monthly income.
Although in last week’s blog we found that the cost paid for a rental deposit is due to drop for the first time since 2015, it still requires UK tenants to pay out £1,299.
With a current annual net wage of £29,068, the average male tenant is paying 4.5 per cent of their yearly income to secure a rental property, while the average female tenant is paying 6.6 per cent.
Based on the 50/30/20 rule it would take the average male 2.7 months to save the current rental deposit of £1,299, while the average female would need to save for a further 1.3 months to accumulate the same total.
A cleaner can expect to fork out 9.1 per cent of the annual £14,305 earnings for the average rental deposit, taking them 5.4 months to save, while a secretary will need to save 8.4 per cent of their salary and save for 5.1 months. Looking at professions, the financial hurdle of a rental deposit is the highest for hairdressers and with an annual net wage of £12,071, the average deposit accounts for a huge 10.8 per cent of their annual income, taking over half a year to accumulate (6.5 months).
A chef, estate agent, clergy member, nurse, marketeer, plumber, IT technician and electrician would also be required to tuck away 5 per cent or more of the average net salary to cover the cost of a rental deposit.
For a pilot (2.3 per cent), doctor (2.6 per cent) or lawyer (3.4 per cent), the cost of securing a rental property is far more marginal and would only require them to save for between 1.4 and 2.1 months.
Co-founder of Ome, Matthew Hooker, commented:
“For the vast majority of people and professions, the initial barrier of a rental deposit is more of a cash flow problem than an affordability issue. While it can account for as much as 10 per cent of some people’s annual wage, the struggle they face isn’t necessarily having the finances to do pay it, just that it’s not immediately accumulated and readily available and can take as long as six months to save. As a result, many of us have to turn to friends or family to help overcome this initial obstacle and many great tenants that don’t have this option can miss out on the chance to rent altogether. Thankfully, we’re starting to see a change in the sector whereby more products and options are available to suit help vast and varied range of tenants reliant on it to put a roof over their heads.”