The BBC has recently reported how letting agents have robbed more than £1m from tenants' deposit schemes last year. The article revealed how 14 UK letting agents were prosecuted in 2016 for helping themselves to tenants' cash.
Since 2007, there is a legal requirement that landlords and their agents put every tenant's deposit in a government-backed scheme, such as the Tenancy Deposit Scheme (TDS).
But the money can either be held in a custodial account run by the scheme, or it can be held in a bank account, which the landlord or letting agent can access at any time.
The BBC’s news story and programme Inside Out South West on BBC One spoke to several people, including landlords, tenants and workmen who were all owed money.
This isn’t the first time that the scheme has been questioned.
Calls for reform
Following the recent closure of Morgan Hampton lettings and estate agents in Wimborne, Dorset – which has left behind a queue of customers claiming their deposits have gone missing - property expert Ajay Jagota said that the TDS is “the sector’s dirty little secret”
Speaking to LandlordToday in January, he said: “Renting in the UK is starting to feel like a protection racket where paying the right organisations lets you pretty much do as you please.
“We’ve been trying to get to the bottom of what has happened in this and several other cases, where tenancy deposit schemes, redress schemes, industry bodies like ARLA the firms involved have been members of have been fundamentally unable to prevent serious wrongdoing and are now unwilling to answer our questions.
“Some £2.4bn of deposits are currently held by letting agents in insurance tenancy deposit schemes … If people want to act fraudulently it is really easy to do that. The entire system is in urgent need of reform.”
He believes that a more effective way to improve the private rented sector would be for monetary deposits to be abolished.