Britain’s tenancy deposit scheme system costs the country £2.5billion in its biggest cities alone.
Research from insurance-backed deposit-free renting solution Dlighted in August 2016 showed renters in the UK’s biggest fifteen cities have handed over £2,480,581,920 to their landlords and letting agents – 97% is likely to be handed back at the end of their tenancies.
The figures – calculated by multiplying the number of privately rented households in the city by the average cost of a standard deposit of four weeks rent.
A further £47m is being used in the DPS n Birmingham, £40m in Bristol and £39m in Manchester.
Newcastle and Sunderland in the firms’ native North East meanwhile see deposits of £14m and £15m.
The total estimated value of tenancy deposits in the UK’s biggest 15 cities is as follows:
- London – £2.2bn
- Birmingham – £47m
- Bristol – £40m
- Manchester – £39m
- Leeds – £34m
- Glasgow – £32m
- Liverpool – £23m
- Cardiff – £23m
- Southampton – £21m
- Sheffield – £18m
- Leicester – £17m
- Nottingham – £16m
- Sunderland – £15m
- Newcastle – £14m
- Belfast – £11m
Property Expert and deposits campaigner Ajay Jagota of Dlighted, whose deposit replacement insurance system gives landlords £500,000 of accident cover, a rent guarantee and free legal assistance said:
“Statistics show that 97% of deposits are handed back to renters at the end of their tenancy, meaning that the UK effectively has more than £2.5billon in loose change down the back of the sofa in its fifteen biggest cities alone.
“It’s not that this money is just gathering dust – in a lot of cases it’s gaining interest in the bank accounts of corporations it doesn’t legally belong to.
“Just think what else that money could be spent on and what problems it could solve. No-one in their right mind would say that this is the best use of £2.5billion.
“The irony is, it’s not even like that deposit money will stretch far. Even the best tenants aren’t above knocking over a glass of red wine, but most deposits in places like Sheffield, Liverpool and Belfast aren’t going to stretch to buying a landlord a replacement carpet when they move out. And no landlord really wants to go a tenancy dispute service to cover those costs, even in the unlikely event that a traditional DPS deposit covers those costs.
“It’s high time we reform deposits by moving to a insurance-based system like every other industry on Earth. Other industries don’t ask their customers to hand over money up front on the off-chance they may cause damage, so why does the private rented sector?”