Pressure group, Dlighted, is bemoaning the amount of ‘useless’ money tied up in tenancy deposit schemes in London. Research has revealed that there is almost £2bn held in bank accounts on behalf of tenants and landlords, 97% of which will be returned at the end of a tenancy agreement.
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Deposits are Useless says Dlighted
“The irony is, it’s unlikely these deposits will even solve the problems they’re supposed to,” says Ajay Jagota from Dlighted.
“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.”
The largest amount of cash – £250m – is held in the Westminster borough. A further £136m is held in Kensington and Chelsea, and £124m in Camden. These figures reflect the number of households in the private rental sector: in Westminster, 43% of homes are privately rented.
Tenancy Deposit Schemes
Landlords now have to place deposits in an approved tenancy deposit scheme, so the money is protected. If the landlord doesn’t do this, the tenant can apply to court to have his deposit returned. The court may also order the landlord to hand over three times the amount of the deposit, as compensation.