14th January 2003

In the final three months of last year, ARLA member letting agents held over a quarter of a billion (£264.5 million) pounds 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. ARLA agents successfully resolved eight out of ten of these disputes after negotiating between the two parties.

Overall, the average deposit held was £1,213 but there were 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.

Announcing the figures today, 14th January, Adrian Turner, Chief Executive of the Association of Residential Letting Agents, ARLA, said, “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.”

The survey showed that, taken nationally, on average each ARLA member letting office holds deposits against 174 properties. 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 retentions.

“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,” Mr Turner explained.

“This is why ARLA backs the government over the Tenancy Deposit Scheme and is actively consulting over Law Commission proposals to reform housing law.

The Law Commission is to explain how proposals will be developed at the annual ARLA Conference at the end of January.

In the case of disputes over deposits, the ARLA 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. This is a marginal rise since the previous quarter, from 7.0% to 7.9%.

This is reflected in all regions. The largest rise was in London, where the incidence of disputed deposits rose from 7.7% to 9.4% of all tenancies. It is believed this may be a reflection of the economic circumstances governing the central London rental market. In the rest of the South East, the number of disputes was 7.2% and for the rest of the country the average was 7.6%.

More than eight out of ten (83%) of these disputes are then resolved to the satisfaction of both parties after negotiations through the ARLA agent.

The lack of deposits or deposit guarantees from local authorities is one of the factors which continues to work against Housing Benefit tenants finding accommodation in the Private Rented Sector. On average 77% of all landlords now instruct their letting agents not to accept tenants on benefit. This is a rise of 3% over the last three months.

“Until the benefit system operates to fulfill market conditions, the Private Rented Sector will not be able to help government to accommodate benefit tenants. It is the system that works against the tenant. Typically, it is not the fault of the individuals themselves,” Adrian Turner concluded.

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