According to finance website Money.co.uk, 284,000 landlords have failed to protect their tenants’ deposits. This would mean that £514m worth of deposit money is unprotected.
The site has also called for a national register of private landlords.
The Centre for Economics and Business Research (Cebr) was commissioned to conduct the research into deposit protection on behalf of Money.co.uk.
Are £514m Worth of Tenant Deposits Unprotected?
The study found that with around one in five (4.6m) UK households living in private rental accommodation and the average protected deposit being £1,040, the total value of tenant deposits placed in protection schemes by landlords has now hit a huge £3.2 billion.
However, despite the risk of fines for landlords who do not protect their tenants’ deposits, Money.co.uk claims that 15% are still failing to do so. It says that these landlords are earning up to £8.5m a year in interest on unprotected money, while leaving themselves and their tenants with no third party protection when their tenancy agreement comes to an end.
It is compulsory for all landlords to protect tenant deposits for Assured Shorthold Tenancy agreements (ASTs) through one of three Government-backed tenancy deposit schemes, within 30 days of receiving the payment.
Landlords must then provide their tenants with prescribed information detailing who their deposit is protected with, who they are renting from and how they raise a dispute if necessary.
The three schemes – the Deposit Protection Service, the Tenancy Deposit Scheme and My Deposits – give landlords and tenants access to a free dispute resolution service if an issue does arise when the tenant moves out. In many cases, this eliminates the need for court action.
The Editor-in-Chief at Money.co.uk, Hannah Maundrell, explains the importance of protecting tenant deposits: “Renting is a money minefield, and with troubled times ahead for the buy-to-let market, the problems caused by dodgy landlords are only likely to get worse.
“While many landlords are doing the right thing and protecting deposits in one of the official Government-backed schemes, a worrying amount of money is falling through the cracks and far too many tenants are being left vulnerable.”
She advises: “Renters must take control and ask landlords which protection scheme their money will be stashed in before signing on the dotted line. Existing tenants must ask for proof their money is protected if their landlord hasn’t given them the correct written documentation.”
Maundrell would like to see changes to the legal system. She says: “It’s not right that tenants are left responsible for taking their landlord to court if their deposit hasn’t been protected. The Government needs to step in and take decisive action. Introducing a compulsory register listing every landlord that rents out property in England and Wales would be a start. This works for Scotland and Northern Ireland, and it seems crazy this hasn’t been brought in across the UK.
“Add in tenants’ ratings and reviews to this too and you have both the beginnings of a solution that helps renters make an informed choice about who they’re handing over buckets of cash to, and the foundation for policing landlords that are currently going unchecked.”1
All landlords must remember to protect tenant deposits – don’t get caught out!