Whitehall departments have agreed to offer deposit loans to staff looking to take up new tenancies in the private rented sector.

The scheme, which works in the same way as a staff season ticket loan, will allow employees to borrow some of their salary upfront in order to pay for rental deposits, which is then repayable from salary payments over up to a year. It is available to be taken up in both the public and private sectors.

The Department for Communities and Local Government last October became the first government department to roll the scheme out to its staff, with ministers pushing other parts of government and the public sector to follow suit.

The Department for Business Innovation and Skills is working to increase availability across the private sector. Housing Minister Brandon Lewis has urged employers in the private sector to join the scheme in the near future.

The scheme was created by the homelessness charity Shelter and the Greater London Authority was another public body to introduce the scheme for its staff.

The tenancy deposit scheme can be adapted by different employers to suit their needs, but generally 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.

The problem of finding a deposit for a rented property is more acute for the lower paid civil servants who receive housing benefit which cushions them from the high cost rents in London and other cities. Housing benefit is paid in arrears but rent is paid in advance.

The minimum deposit landlords require is one month’s rent in advance plus one months rent as deposit. In some cases the deposit can be a high as three months rent. At the upper end of the scale in London this could mean finding an initial payment of some £4000.