One of the growing number of deposit replacement providers claims that there could be £1.2 billion in deposit monies that are not protected by letting agents or landlords.
Hamilton Fraser’s Ome service says there are an estimated 3.5m deposits protected across the entire market, totalling some £3.9 billion - based on the typical tenant deposit of £1,139 on average.
Ome compared these statistics with the latest English Housing Survey report which shows an estimated 4.6m tenancies in the private rental sector in 2019.
With only 3.5m of these tenancy deposits accounted for in protection schemes, Ome claims there are potentially 1.1m tenancies that either have not had a deposit protected, do not have deposits, or are using deposit replacement products.
“At worst, there could be as much as £1.2 billion in deposit monies that are not protected” it claims in a statement.
The service also quotes a report by the Centre for Economics and Business Research which produces a different figure.
It estimates that 14.5 per cent of all deposits held are not protected by landlords or agents. This means of the estimated 1.1m tenancy deposits that are unaccounted for, just over 500,000 cash deposits could currently be unprotected, putting £578m at risk.
“It’s impossible to tell just how many deposits are still sat unprotected in the bank accounts of either rogue landlords or agents but based on market data we can make a conservative estimate that this total value runs into the hundreds of millions of pounds” says Ome co-founder Matthew Hooker.