While more than 59% of tenants would prefer a deposit alternative scheme, just 13% were given the option, Zero Deposit has found.
Zero Deposit surveyed 1,107 tenants who moved into their rental property within the past two years.
Of those surveyed, 49% classed themselves as professionals, with families also making up a large proportion of the market (33%).
85% were asked to pay a deposit in order to secure their rental property, with 67% stating their deposit was capped at five or six weeks rent, while 18% could not recall what they paid.
43% of those tenants who paid a deposit did so to their landlord, while 57% paid the landlord’s letting agent.
Just a quarter of tenants (24%) were aware of deposit alternative schemes, and 87% were only offered the route of a traditional rental deposit.
When asked how they would have used the money saved on a rental deposit, tenants said they would pay other outgoing bills, cover the cost of renting, or start their own savings pot.
Almost a third of tenants (31%) surveyed also did not know whether their deposit is protected by a tenancy deposit scheme.
58% said it was protected by a custodial or deposit protection scheme, while 11% were covered via an insurance-based scheme.
30% were in the dark when around the process of having their deposit returned to them, but 82% were confident that they would receive their full deposit.
Sam Reynolds, CEO of Zero Deposit, said: “A rental deposit is one of the biggest obstacles many tenants face when it comes to securing somewhere to live.
“So, it’s quite astonishing that as many as 76% are unaware about the options available to them when it comes to potentially bypassing this considerable upfront cost.
“When given the choice, tenants showed a clear preference for a deposit alternative that offered regulatory protections.
“This isn’t unusual as many are purchasing the product for the first time and naturally prefer the security provided by FCA oversight.
“Whether it’s a deposit alternative or a traditional deposit, it’s essential all parties understand the product clearly and are offered a fair and unobstructed choice of both options.”
