Dlighted is trying to persuade more landlords and tenants to use its deposit-free renting service by claiming that at least £2bn is being lost to the British economy in ‘useless’ tenancy deposits in London alone.
Research by the company indicates that the capital’s 960,000 privately rented households have handed over £1.9bn to their landlords and letting agents – 97% of which will be handed back to them at the end of their tenancy.
The figures are obtained by taking the number of privately rented households in each of the capital’s 33 boroughs and multiplying them by the average monthly cost of renting a property there – the typical cost of a deposit.
With many landlords and agents demanding deposits now asking for deposits equivalent to six weeks, Dlighted says that the total cost to the capital of rental deposits could be as much as £3bn.
Areas where private rents costs the most in the capital are worst hit.
The ten London boroughs with the largest overall estimated value of tenancy deposits are:
1. Westminster - £250m (43% of households privately rented)
2. Kensington and Chelsea - £136m (33%)
3. Camden - £124m (31%)
4. Lambeth - £111m (34%)
5. Wandsworth - £100m (31%)
6. Barnet - £95m (31%)
7. Ealing - £90m (35%)
8. Brent - £82m (35%)
9. Tower Hamlets - £74m (32%)
10. Newham - £73m (43%)
Ajay Jagota of Dlighted said: “The £11m we’re wasting in Bexley alone should be a national scandal – and that’s one borough in one city, and the borough with the lowest tenancy deposit bill at that. Just think what problems £74m could solve in Tower Hamlets, what good £100m could do in Wandsworth and what better ways there are to spend £44m in Lewisham.
“The irony is, it’s unlikely these deposits will even solve the problems they’re supposed to. Statistics show that 97% of deposits are handed back untouched at the end of their tenancies. And whether you’re renting out a property in Kensington or one Brent, it’s either unlikely you’ll go through the process of using a deposit to pay for minor damage, or that the deposit will cover the costs of major damage.
“In the meantime that money isn’t just gathering dust, its gaining interest in the bank accounts of people it doesn’t legally belong to. The industry needs to take a good hard look at itself and consider moving to a insurance-based system like every other industry on Earth. It would mean a better deal for landlords, a better deal for renters and more money in our economy.”