Financial website money.co.uk has claimed that 284,000 landlords have failed to protect tenants’ deposits, amounting to £514m in unprotected funds. It has also called for a national register of landlords.
Money.co.uk commissioned the Centre for Economics and Business Research (Cebr) to carry out research into deposit protection.
It concluded that with approximately one in five (4.6 million) households in the UK now privately rented and the average protected deposit at £1,040, the total value of deposits paid by tenants and placed in protection schemes by landlords has now reached a whopping £3.2 billion.
But despite the risk of fines for landlords who fail to protect their tenants’ deposits, money.co.uk claims 15% are still failing to do so. The site claims these landlords are together earning up to £8.5 million a year in interest on unprotected money, while leaving themselves and their tenants with no third party protection when their agreement comes to an end.
It is mandatory for all landlords to protect deposits for assured shorthold tenancies via a government backed tenancy deposit scheme within 30 days of receipt. Landlords must also give tenants prescribed information about where their deposit is protected, who they are renting from and how they raise a dispute.
The schemes give landlords and tenants access to a free dispute resolution service if things go wrong when the tenant moves out, eliminating the need for court action in many cases.
Hannah Maundrell, editor-in-chief at money.co.uk, said: “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.
“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.
“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.”
