DCLG has revealed that the total value of cash lost to the British economy through tenancy deposits has rocketed to £4.1b – a rise of 22%.
DCLG has admitted that Britain’s tenancy deposit bill has risen above £4bn.
Figures obtained from the Department of Communities and Local Government by deposit free renting firm Dlighted as part of the #ditchthedeposit campaign show that as of March 31 this year the total cash value of deposits held in deposit protection schemes was £4,107,045,898.
Previous figures showed £3.2bn being held in deposits.
The DCLG figures show that 14,011,116 deposits are protected in a deposit protection service licensed by DCLG and operated by mydeposits, the Tenancy Deposit Service and the Deposit Protection Scheme.
The figures also show there is a deposit dispute in just 1.5% of tenancies – meaning deposits are unnecessary on 98.5% of occasions.
Estimates by Dlighted – calculated by multiplying the number of privately rented households by the average cost of a standard deposit of four weeks rent – show 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 Birmingham, £49m in Liverpool and £47m in Manchester.
Newcastle and Sunderland in the firms’ native North East meanwhile see deposits of £35m and £18m.
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 – £17.8
14. Glasgow – £17.3
15. Belfast – £16.4
Ajay Jagota, is head of the #ditchthedeposit campaign, which is calling on the government to give Britain’s renter’s greater access to deposit-free renting through deposit replacement insurance, and to convert Britain’s £4.1bn of cash deposits into Help to Buy ISAs for renters wanting to save for homes of their own.
“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.
“#ditchthedeposits is asking the government to make renting cheaper while procting landlords better – and by releasing £4.1bn into the economy they would have as much to gain as anyone.”
Ajay Jagota is founder of Dlighted, a zero deposit alternative to the current tenancy deposit schemes such as mydeposits, the TDS and the DPS.
Dlighted’s low cost deposit replacement insurance lowers the cost of renting while giving landlords over £500,000 of protection against property damage, £75,000 of cover for unpaid rent, and £50,000 of legal protection.