The huge sums involved in tenancy deposits has been revealed by new research which shows that last year, just over £5.2bn was held via authorised schemes.
The average tenancy deposit was £1,139.
Had the £5.2bn been in circulation, it could have been used for investment in business, property or support services, it is argued.
For example, the £5.2bn could have boosted overall business investment – which stood at £198bn in the UK last year – by 2.6%.
The amount also exceeds investments into sectors including oil refinery, forestry and fishing, hotels and restaurants, and health and social work.
The number crunching has been done by Ome, the newest provider of tenancy deposit replacement products.
Co-founder Matthew Hooker said: “It’s quite astonishing when you consider the total sum used as rental deposits across the nation and especially when you compare this with investment into the UK.
“It really puts into perspective just how much money it actually is.
“To think it exceeds the annual investment seen in a number of UK business sectors, and is nearly 3% of total UK business investment in the last 12 months, is remarkable.
“Of course, we appreciate that these unutilised tenant funds are unlikely to be ploughed into the UK business sector via investment if they weren’t tied up, but it does demonstrate the huge sums being held by landlords and agents and the sheer size of financial security the nation’s tenants must collectively put down when looking to rent.”
Ome is sister company to Hamilton Fraser’s MyDeposits, which does take traditional deposits from tenants.
Comments (5)
Do the deposit schemes/landlords/agents have this money under their mattresses? Or is it being held in bank acocunts where it will be invested in businesses etc? I would suspect the later, which given Mr Hooker’s appreciation ‘that these unutilised tenant funds are unlikely to be ploughed into the UK business sector via investment’ means having the money in deposit schemes is actually a good thing for the economy?
(qweasdzxc) You should try reading the article.
The number crunching has been done by Ome, the newest provider of tenancy deposit replacement products.
Co-founder Matthew Hooker said…
So, we’ve got Eddie Hooker running MyDeposits and his brother Sean Hooker running the Property Redress Scheme and now there’s Matthew Hooker here running OME. What a nice little club eh. All working in the tenants’ interests, i’m sure.
This is what the Government wanted plus the chance of creaming off unclaimed money! Mind you the costs of running the arbitration scheme has to be paid for from the investment of that money which should not be forgotten.
Every day it seems someone somewhere comes up with a different way to manipulate the figures. Almost all who do so have a vested interest.
So far, to comply with the crazy idea of reducing security deposits, we have arranged via DPS, for about £20,000 to be returned to tenants who had paid a sensible deposit based on risk. Some tenants will be getting c£300 back, 1 tenant over a £1000.
Does this mean that all these tenants are going to spend spend spend? Those I have spoken with are, in the main, saying that they will use the money to pay off debt, mainly credit cards, where the money is already spent!
Meanwhile, at the end of each tenancy, the landlord has very little to compensate for tenant’s failings.