The average tenancy deposit paid by tenants in England and Wales now stands at £967.84, with deposits of properties with a London postcode unsurprisingly the most expensive in the country at an average of £1,756.16, according to the Deposit Protection Service (DPS).
Sunderland had the lowest average deposit, with the figure for properties with its ‘SR’ postcode averaging less than three times lower - £467.32 - than that for London.
When renting out a property, most landlords choose to take a deposit from the tenant prior to the tenancy starting. The deposit gives a level of protection to landlords and means that should the tenant breach the terms of the tenancy agreement, such as causing damage or not paying rent, you can then make appropriate deductions from the tenant’s deposit.
Deposits taken on assured shorthold tenancies in England and Wales by landlords or letting agents must be protected within 30 days in any one of three government-backed insurance based or custodial deposit protection schemes operated by MyDeposits, Deposit Protection Service (DPS) and the Tenancy Deposit Scheme (TDS).
The insurance product enables landlords or agents to retain the deposit during the tenancy but in return pay a protection fee to the scheme.
The custodial scheme allows landlords or agents to hand over the deposit for protection during the tenancy, with no fees attached. The scheme is funded entirely from the interest earned from the deposit pool.
There are separate tenancy deposit protection schemes in Scotland and Northern Ireland.
The three appointed scheme administrators in Scotland are Letting Protection Service Scotland, Safedeposits Scotland and MyDeposits Scotland.
In Northern Ireland, the schemes are Deposit Scheme Northern Ireland, MyDeposits Northern Ireland and Letting Protection Service NI.
But although it has been mandatory to hold a tenancy deposit in a tenancy deposit scheme since 2007, as many as 300,000 landlords are estimated to be running the risk of a heavy fine for not placing money into a government authorised scheme, research reveals.
Tenants can apply to a local county court if they think their landlord has not used a deposit protection scheme when they should have, and if found guilty, the court can order the landlord to pay up to three times the deposit within 14 days of making the order.
Landlords could also face penalties if their agent failed to comply with the tenancy deposit regulation.
Julian Foster, managing director at The DPS, said: “Over the last ten years The DPS has protected almost five million deposits across England and Wales, and we’ve generally seen deposit sizes increasing during this time.
“Tenants need to consider that the deposit for their next property may be greater than the sum protected for their current residence and plan ahead so that they can make the house move they want to make without any financial barriers.
“Whatever the cost, however, both landlords and tenants are assured peace-of-mind during their tenancy and fairness when it ends when using The DPS’ popular, easy-touse and ultra-secure systems.”