Crooked letting agents were convicted of stealing £1,018,100 of deposits in 2016 – and one campaigner believes this figure could be the tip of the iceberg.
The total is the equivalent of 1000 renters being ripped off to the tune of £1100 – the average UK rental deposit – with at least one landlord or letting agent convicted every single month.
Analysis from renting reform campaigner Ajay Jagota of Dlighted shows courts have found at least 14 letting agents guilty of illegally pocketing renter’s deposits in 2016, with the size of the thefts ranging from £500 to £400,000.
The figures came as trade body ARLA publically revealed that two further firms had between them misappropriated over £500,000 of client money.
“If a piece of jewellery or a painting worth £1m was stolen or 1000 consumers were simultaneously ripped off it would be a major news story. So why should another theft of that scale be tolerated?
“It’s plain and simple: If landlords and letting agents didn’t take cash deposits these thefts would be avoided.
“The most horrifying part is that this is in all probability just the tip if the iceberg. Two thirds of the industry opt for a insurance-based tenancy DPS meaning they are custodians of £2.4 billion of the £3.5 billion held in tenancy deposits.
“If we use an example of a small agency letting out 100 properties and charging the UK average deposit of around £1100 they should have a client account with more than £100,000 in it. But this money still belongs to their clients.
“Assuming tenant turnover of around 10% a month only £11,000 will ever be called upon to pay out and as the account is always being replenished so it’s easy for money to go “missing” and for tracks to be covered.
“The worst part is that there will be otherwise upstanding and honest agents who misappropriating client money they believe to be legitimately theirs to use.
“All three DPS bodies are clear – deposit money must be placed in a completely ring-fenced account and not touched by the agent or landlord for any business purpose. But I believe there is a common misconception in the industry that to do so it completely legitimate. And there are no check and balances stopping them.
“Countless agencies could be unwittingly breaking the law, and if some agencies are habitually using deposit money in their day-to-day activities, what happens if they no longer could? They would become insolvent overnight.
“The only answer is the industry evolving past using cash deposits to mitigate against risk of damage and move to a theft-proof deposit replacement insurance model of asset protection as many other sectors have done. Yet again is this evidence of the property sector resistance to change.”