Earlier this week, the UK's tenancy deposit protection schemes reported hard numbers (via Property Industry Eye):
2.85m deposits protected at a
Total deposit value of (almost) £3bn
There were further numbers:
Average deposit value is £1,006
Less than half of deposits (42%) represent 4 weeks or more of rent
It begs the question: why bother taking a deposit at all? With all the regulation around deposits stacked in the favour of the tenant, it seems too much hassle for landlords and agents to bother with deposits. It's not like the 'good old days' when an agent or landlord could dip their hand into a tenant's pocket/deposit whenever they took a funny turn.
Now, if you want a claim to a tenant's deposit money, you have to make a claim. If the tenant disagrees with your claim, whichever scheme you are with takes you through adjudication to decide the claim. And this is where the numbers get juicy. Since 2007 (when deposit protection came into law and the schemes were launched) there have been:
117,000 adjudications, of which
29% awarded all the deposit to the tenant, and only
15% awarded all the deposit to the landlord
So if fewer than 1% of deposits are disputed at the end of a tenancy, why is the landlord industry at large bothering with deposits at all?
None-the-less, nice little earner for the three deposit protection schemes:
TDS (1,085,116 deposits)
Deposit Protection Service (1,105,619)
All these figures are stated to be correct as of 31 March 2014.
This release of numbers is mighty interesting. For the longest time, no one has had any clue about the rental market: no idea of market rents, who lives where, etc
But here, clear as day are three databases with all the data you need on move-in dates, length of tenancies and most important of all: actual rent amounts.
If this data was open sourced, the opportunities for market efficiency would be astounding; for both investors/landlords as well as tenants.
The only people who might grumble are agents, but they still grumble about Zoopla offering house price estimates, even though everyone knows they are little more than Random Generated Numbers.
There are rumblings that local councils are in discussions to 'license' the data. If this does happen, it could set a precendent for commercialising this data. Not as good as open sourcing, but still putting the data into the public domain would push the industry forward leaps and bounds. Imagine, seeing actual rental yields alongside house price data in some sort of Super Land Registry.
I guess you also want me to answer the question about why landlord still bother with deposits? Of course. Right then:
Landlords feel entitled to demand the Earth from tenants
To make sure the tenant delivers, a landlords needs to 'feel' they have leverage
What better leverage than 'somebody else's money' - enter the deposit, typically equal to 6 weeks rent
Can't touch the deposit, as you might be fined 3x the deposit amount? No problem.
Doesn't hurt to just ask the agent to deal with all the mess and charge the deposit protection fees to the tenant.
Landlord gets leverage over tenant, tenant pays extra for aforementioned subjugation and the rich get richer while the poor get poorer.
If the poor got richer, then they would buy, rather than pay rent. Can't have that now. But I will take a deposit via bank transfer, than you very much.
Here's the original article at Property Industry Eye: http://www.propertyindustryeye.com/nearly-3bn-worth-money-protected-deposit-schemes/