Who Tops the Tenant Deposit League?

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New data reveals how much tenants are paying to rent a home near every football ground in the top four divisions of the English game

Fulham is top of the league when it comes to the size of deposits paid by tenants renting homes in the postcode area of every football ground in the English game’s top four divisions.

Local estate agent Lawsons & Daughters says data released by The Deposit Protection Service reveals that tenants renting near Craven Cottage, Fulham’s home ground, paid an average deposit of £1682.76.

And figures released by a homeless charity gives landlords with rental homes all over London two reason to believe the future is bright.

Around a quarter of London’s population rent from private landlords and that number will increase over the next four years, according to Shelter.

By 2020 first-time buyers in London will not only need an annual salary of £106,000 to take out a mortgage but will have to save £138,000 to put down a deposit on a property – if predictions made by the charity that property values will rise 23% prove correct.

Despite the government introducing a 3% stamp duty surcharge on second homes, estate agents including Wimbledon-based Robert Holmes & Co, say it is still an ideal time to buy an investment property in the capital – providing it is in easy reach of an Underground station and other local facilities.

But Eden Harper, an estate agent with branches in Brixton and Battersea, sounds a note of caution. New regulations put forward by the Bank of England will force investors purchasing a buy-to-let property to pass tougher mortgage affordability tests.

The majority of BTL mortgage approvals are currently based on assessments comparing repayments against future rental income.

However, the Bank of England’s Prudential Regulation Authority now wants lenders to take account of all the costs a landlord faces when renting out a property, including the fees charged by letting agents.

The PRA, which was established following the abolition of the Financial Services Authority, also wants lenders to apply a stress test to gauge the affordability of a BTL mortgage should interest rates rise.

And landlords with four or more investment properties will be subject to a stricter affordability assessment – if the proposals come into force.

This latest blow to landlords, which could be introduced after a public consultation ends on 29 June, follows government attempts to squeeze more money out of property investors.

These include new rules to be phased in next year that limit the amount of mortgage interest relief available to buy-to-let borrowers.

Although the PRA’s recommendations do not include capping loan-to-value ratios, some building societies have brought in such rules.

Landlords who take new loans from the society’s specialist arm The Mortgage Works arm of Nationwide has ruled that landlords will only be able to borrow up to 75% of a property’s value, instead of the current 80%, and will have to prove that their rental income is at least 145% of their monthly mortgage payments. Currently the figure is 125%, in line with most other lenders.

TMW says the move is designed to help landlords strengthen their cashflow position “and help them withstand the impact of increased costs from the new tax regime”.

But considering the level of tenant deposits reflect the rent achievable on properties, London landlords should be able to withstand the tighter borrowing conditions.

Landlords in Liverpool, on the other hand, may suffer. The Deposit Protection Service puts Everton at the bottom of its league table, with tenants renting homes near the football club’s Goodison Park ground paying an average deposit of just £383.26.