Earlier this week, plans were announced for the national roll-out of a London scheme offering employees an interest-free loan to fund their deposit on a rented home.
The scheme, which works in a similar way to interest-free travel loans, offers employees an interest-free loan to pay for a tenancy deposit when they move into a privately-rented home. Repayments are then deducted from their monthly salary over a period of time until the loan has been repaid.
This is likely to be welcome news for many employees in light of average rents in the UK having risen by 6.6% in 2014, according to figures from tenants’ reference firm HomeLet.
The average rental deposit size now stands at £1,210 in England and £1,859 in London, according to tenancy deposit protection scheme My Deposit.
Rents (and consequently deposits) are predicted to rise further in 2015, pricing even more employees out of the home buying market, particularly those who aren’t fortunate enough to have family and friends that they can turn to for financial support.
For many employees, this amount will represent a significant chunk of their monthly wage. While, for some low-paid staff, this may exceed their monthly take-home pay altogether.
Knowing that they are able to access support via their employer will undoubtedly breed increased employee engagement and productivity levels, thanks to the greater peace of mind afforded to them.
Organisations such as The Co-Operative Group and Gerald Eve are already rolling the scheme out to their workforces. It will be interesting to see how many others follow suit.