Crooked letting agencies have been convicted of stealing £1,018,100 of deposits this year alone – and one agent claims this figure could be just the tip of the iceberg.
Anti-deposit campaigner and letting agent Ajay Jagota says courts have found at least 14 letting agents guilty of illegally pocketing renters’ deposits in 2016, with the size of the thefts ranging from £500 to £400,000 - and there remains over two months of the year to go.
Ajay Jagota, who operates the north east lettings firm Keep It Simple and deposit-free renting system Dlighted, says if landlords and letting agents simply didn’t take cash deposits these thefts would be avoided.
“This is in all probability just the tip if the iceberg. Two thirds of the industry opt for an insurance-based tenancy deposit scheme meaning they are custodians of £2.4 billion of the £3.5 billion held in tenancy deposits” he says.
He says that if a small agency is letting out 100 properties and charging the average deposit of around £1,100, it should have a client account with over £100,000 in it - which belongs to its clients.
“Assuming tenant turnover of around 10 per cent a month only £11,000 will ever be called upon to pay out. As the account is always being replenished so it’s easy for money to go ‘missing’ and for tracks to be covered” he alleges.
Jagota says that despite all three tenancy deposit schemes being clear in their objective - stating deposit money must be placed in a ring-fenced account untouched by the agent or landlord for any business purpose - he believes “countless agencies could be unwittingly breaking the law” by using deposit money in day-to-day activities.
“The only answer is the industry evolving past cash deposits and moving to a theft-proof insurance model of asset protection as many other sectors have done. Yet again is this evidence of the property sector resistance to change” he adds.