Just under a third of people moving from one privately rented property to another in the past two years had to pay a new deposit before their old one was returned, according to a research exercise by consumer group Which?

The group describes this as evidence of “the broken deposit system.”

It says 43 per cent of private renters have to use a credit card, loan or overdraft, or borrow money from family and friends, to cover the cost of moving into a property. 

Which? says a key element of the cost is the security deposit, sometimes coupled with a long wait to have a previous deposit returned. 

Among tenants who had moved out of a rented property in the past two years, one in six who did get their deposit back said it took more than four weeks to arrive. 

Some 55 per cent of tenants who didn’t get their old deposit back in full challenged the decision. 

Which? says the most common reasons for a deduction was cleaning (50 per cent) and damage to property (32 per cent). 

The group also claims that one in 10 respondents to its survey claimed not to have been told the reason for a deposit not being returned in full. 

The results also highlight what the group calls “a lack of clarity about what your deposit money can be used for.” 

It says 62 per cent of landlords it questioned incorrectly believed the deposit could be used to pay outstanding utility bills, and Which? says both tenants and landlords need clearer guidance on the circumstances in which reasonable deductions can be made. 

“We believe the government must review deposit adjudication schemes to ensure they are working in the best interests of tenants. It must also provide an effective way for renters to escalate complaints made to their deposit adjudication schemes with the deposit adjudication service, if complaints haven’t been adequately resolved in-house” says the group. 

“[Government] should review the current, cash-based deposit system, and consider possible alternatives to avoid tenants having to cover two deposits at once when moving between properties. These alternatives include new, insurance-style options or the direct transfer of deposits between properties.”

Alex Neill, the managing director of Which? home products and services, says: “The number of people going into debt to cover the cost of a new deposit is concerning, particularly when you consider that many are forced to wait a significant time to get their previous one back, and could then face deductions that they don’t think are reasonable. 

“The findings highlight that the deposit system is crying out for reform to make it fit for purpose for the record numbers of people who are living in rented accommodation. We believe that the government must tackle the issues that we have identified in our report head on to ensure that the rental market delivers for consumers.”