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London has almost £2bn in ‘useless’ deposits
This article is an external press release originally published on the Landlord News website, which has now been migrated to the Just Landlords blog.
New research into tenancy deposits indicates that the 960,000 rental properties in London generated in excess of an eye-watering £1.9bn in deposits to landlord and agents.
The investigation from deposit-free renting solution Dlighted suggests that 97% of these will be returned at the conclusion of the tenancy agreement.
Rental Bills
These figures are obtained by taking the number of privately rented properties in the capital’s 33 boroughs. These are then multiplied by the average monthly cost of renting a property in the region-the typical cost of a deposit.
However, many landlords and letting agents asking for deposits are looking for these equivalent to six weeks rent. This means that the overall cost of the capital rental deposits could hit £3bn.
In Westminster, almost half of residents in the region privately rent. This area is worst hit, with a deposit bill of over £250m.
Kensington and Chelsea comes next, with 33% of residents renting in the borough paying a combined £136m.
Other boroughs with a high rental bill include Camden (£124m), Lambeth (£111m) and Wandsworth (£100m).
The ten London boroughs with the greatest overall estimated value of tenancy deposits were found to be:
- Westminster – £250m (43% of households privately rented)
2. Kensington and Chelsea – £136m (33%)
3. Camden – £124m (31%)
4. Lambeth – £111m (34%)
5. Wandsworth – £100m (31%)
6. Barnet – £95m (31%)
7. Ealing – £90m (35%)
8. Brent – £82m (35%)
9. Tower Hamlets – £74m (32%)
10. Newham – £73m (43%)
London has almost £2bn in ‘useless’ deposits
Better spent
Long-time opponent of tenancy deposits, Ajay Jagota, of Dlighted, noted: ‘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 in 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.’[1]
‘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 an insurance-based 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,’ he added.[1]
[1] http://www.propertyreporter.co.uk/landlords/londons-useless-2bn-rental-deposits.html
