The DPS costs the British economy at least £2billion in its capital city alone – a depsosit-free renting firm has revealed.
Research from deposit-free renting solution Dlighted in September 2016 indicated 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.
Westminster – where almost half of residents rent privately – is worst hit, with an overall deposit bill of £250m.
Kensington and Chelsea is the borough hit with the next biggest bill with the 33% of residents who rent privately in the Royal Borough forking out a combined £136m just to move into their homes.
Other badly-hit boroughs include Camden (£124m), Lambeth (£111m) and Wandsworth (£100m).
Bexley – where only 11% of residents rent privately – has the smallest deposit bill, with only £14m lost to the economy in the borough.
The ten London boroughs with the largest estimated value of money held in a rent deposit scheme are:
- Westminster – £250m (43% of households privately rented)
- Kensington and Chelsea – £136m (33%)
- Camden – £124m (31%)
- Lambeth – £111m (34%)
- Wandsworth – £100m (31%)
- Barnet – £95m (31%)
- Ealing – £90m (35%)
- Brent – £82m (35%)
- Tower Hamlets – £74m (32%)
- Newham – £73m (43%)
Property Expert and deposits campaigner 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, or even justify a deposit dispute or referring the matter to tenancy dispute service.
“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 deposit replacement insurance 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”.