When moving into a new home, renters currently pay an average £1,150 for a deposit, on top of other moving costs and a maximum of one month’s rent in advance. 

Most of the time we have to find the new deposit before getting our old one back. This means our finances are being stretched at an already difficult time, and many people end up borrowing money to help cover costs. While ‘deposit alternative’ products exist, these often cost tenants more than we would pay for a standard deposit – and we get nothing back when moving out. 

Landlords and letting agents must protect deposits in government-accredited schemes, but tenants often still face problems. Our research shows that 1 in 4 renters have received unfair deductions on their deposit, but the overly complex system and the threat of delays means 4 in 5 are put off from disputing them. 

This is made worse when landlords and letting agents hold the cash themselves and insure it – they can hold the money hostage and put pressure on renters to settle for less than we’re entitled to. 

Renters get an average of 79% of their deposits back if they raise a dispute. The hurdles we face to challenge dodgy claims mean around 300,000 renters are losing hundreds of pounds a year.

The existence of insurance-backed schemes also mean that landlords who use them can keep the interest on your money, worth more than £100m per year. 

The scheme’s contracts expire in 2028, so the government has an opportunity to change this. Ending insurance-backed schemes would mean landlords would have to hand over tenants’ cash to the scheme.

This would make it easier to manage a quick return of money at the end of the tenancy, and the quick resolution of disputes, while allowing interest on the deposits to be used for tenants’ benefit. 

The government should also introduce penalties for landlords who make repeated claims that are rejected by the scheme, which would deter exaggerated claims and restore trust in the system.

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