Landlords' deposits have increased hugely on the back of the boom in buy-to-let properties, though the increase was matched by a higher number of disputes over deductions.
These findings are part of a survey of members conducted by the Association of Residential Letting Agents.
In the final three months of last year, ARLA member letting agents held over a quarter of a billion pounds (£264.5m) of tenants' money in deposits. These were held against damage and dilapidation in 218,000 properties among the portfolios let by ARLA letting agents.
Only 7.9% of these tenancies ended with a dispute over the allocation of deposits between landlord and tenant, with ARLA agents successfully resolving 80% of disputes after negotiating between the two parties.
The average deposit held was £1,213, with major regional differences. In Prime London, the average deposit held was £2,206 compared to £1,058 for the South-East and £627 for the rest of the country.
The survey found that 24% of all ARLA agents had had no disputes at all over deductions for damage and dilapidations. Only 7.9% of all ARLA tenancies had disputes over deposit deductions at the end of tenancies, with an increase since the previous quarter from 7.0% to 7.9%. The largest rise was in London, where the incidence of disputed deposits rose from 7.7% to 9.4% of all tenancies, 7.2% in the South-East and 7.6% for the rest of the country.
Adrian Turner, chief executive of ARLA, says: “This is the first time that such a major survey of letting agents has looked into the amount of tenants' monies actually held on deposit. Even this does not fully illustrate the true scale of the amounts that are protected under the ARLA bonding scheme.”
In addition to tenants' deposits, letting agents clear rents through their client accounts and hold floats for maintenance and repair and, in some instances, tax retention. Turner adds: “In the case of ARLA members, we know that all these sums of money that belong to the public and not the business are processed and held through client accounts that are fully bonded against any form of misappropriation.
“This is why ARLA backs the government over the Tenancy Deposit Scheme and is actively consulting over Law Commission proposals to reform housing law.”