Some 14m tenants’ deposits worth over £4.1bn were covered by authorised schemes, both custodial and insurance-backed as of the end of March.
A critic of the tenancy deposit protection system, who has a strong commercial interest in offering an alternative, says it is a lot of money to take out of the economy.
The actual amount covered by the schemes as at the end of March was £4,107,045,898. This was up from £3.2bn the year before, reflecting the growth of the private rental sector.
The actual number of deposits that have been protected by the deposit schemes since they launched in 2007 was 14,011,116.
The latest figures also show that there is a deposit dispute rate of 1.5% – when disputes have to go to resolution.
Ajay Jagota, whose insurance firm Dlighted offers tenants a no-deposit option, has calculated that close to £2bn is currently being used for deposits on rented homes in London alone.
A further £54m is being used on rental deposits in Birmingham, £49m in Liverpool and £47m in Manchester.
The total estimated value of tenancy deposits in the UK’s biggest 15 cities is as follows:
1. London – £1.98bn
2. Birmingham – £53.9m
3. Liverpool – £49.1
4. Manchester – £47.3m
5. Leeds – £36.6m
6. Newcastle – £34.8m
7. Southampton – £33.1m
8. Sheffield – £31.4m
9. Cardiff – £28.3m
10. Nottingham – £24.8m
11. Bristol – £23.6m
12. Leicester – £22.4m
13. Sunderland – £17.8m
14. Glasgow – £17.3m
15. Belfast – £16.4m
Jagota said: “I don’t know how anyone could see £4.1bn being lost to the British economy by something which is unnecessary 98.5% of the time and believe that the way we rent homes in the UK is not in need of reform.
“Deposits raise the cost of renting, helping to put home ownership out of reach for many renters, but they don’t provide landlords with meaningful protection against unpaid rent or property damage.
“With the Government planning to cap deposits at four weeks rent, landlords will soon only be covered in the event of a single month of unpaid arrears, at a time when Universal Credit has seen some rent arrears quintupling. And that’s before you consider property damage or legal costs.”
The DPS, one of three authorised operators of tenancy deposit schemes in England and Wales, confirmed to EYE last night that it is currently covering 1.2m deposits, and that fewer than 2% go to adjudication.
Today, a spokesperson for DCLG said: “Tenancy deposit protection ensures that tenants get a fair deal at the end of their tenancy.
“The schemes provide a free dispute service for both tenants and landlords if an agreement on the return of a deposit cannot be reached at the end of the tenancy.”
Sounds like adverting. After all you can trust insurance companies as much as you can trust politicians!!
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This money has never been “in” the economy – or at least it shouldn’t have been.
I accept that the number of rented properties has increased, but so has the population so those two cancel each other out.
Landlords and their agents have held deposits since time immemorial which means that deposit money (4-8 weeks worth of rent) has always been “out” of the economy.
I accept that there have been a certain percentage of landlords and agents that have used a deposit or two when they shouldn’t have done, but then that’s why the DPS et al exist!
Sounds like an infomercial to me. Or is it and advertorial?
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We are normally lucky with tenants/deposits but last month had a tenant who overstayed by 10 days without paying the rent and then left without any cleaning or clearing up. Their rent was £750 pcm, the cost of unpaid rent and clearing up after them came to £845 and they’ve had the cheek to make it go to arbitration at DPS! How would an insurance policy have helped my landlord who is out of pocket, has had to stump up for cleaning and remedial works to say nothing of the additional week or so without rent!
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I generally take one and a half months rent as a deposit. Most of my tenants get their whole deposit back, some have maybe £100-£200 withheld for cleaning or decorating, sometimes for carpet cleaning if they have had a pet and haven’t had it done. Some use it for rent arrears and there have been some tenants in the past who deliberately refuse to pay their last months rent because ‘you can just take it from my deposit.’! No, that’s not what it’s there for!
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Shame on you Ros.
Btw, the correct word is ‘escalate’, not ‘spiral’ in such vacuous headlines.
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Really is this guy for real to say
“Deposits raise the cost of renting, helping to put home ownership out of reach for many renters, but they don’t provide landlords with meaningful protection against unpaid rent or property damage.
I believe the cost will increase with tenants using the non deposit insurance payment, since the deposit is the tenants money, and not the Landlord and will be returned this is not a “COST”, or is Ajay Jagota going to refund the monies paid if no claim made……….. I don’t think so, this is an advertising ploy for a business model that does not work for either the Tenant or the Landlord, simply look at the companies that went under with no protection and the losing side was the landlords as no claims could be made, also I’m sure the Landlord would prefer something more tangible such as a physical amount of money held at a Deposit scheme and I’m sure the tenant applicants would prefer to have this money returned in full knowing it was not an additional cost, sorry Ajay Jagota wrong choice of words and bad business model.
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I have a better idea……….Given that we only need access to 2bn at any one time (new deposit is paid before old one is returned) could we not use 2bn as seed capital to attract match funding for house building where tenants “contributing” could have first offer to purchase at discount rate equivalent to cost of borrowing principal sum if funds had not been available? What about a feasibility study paid for by the TDS charitable foundation?
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