PRIVATE renters in England and Wales are missing out on £169 million in interest on their money held as deposits, research revealed today.

Generation Rent estimates that investing the £5.37 billion currently held in government-backed deposit protection schemes could generate significant returns, which could then be used to fund initiatives supporting tenants.

The housing group argues that if all deposit funds, minus a small portion to cover successful claims by landlords, were invested in assets providing a return in line with the current Bank of England base rate of 4.25 per cent, they could generate £226m per year. 

After subtracting £40m for administration costs, some £50m could be put towards helping tenants sue landlords whose property is unfit to live in, campaigners suggested.

A deposit “passporting” scheme with £25.5m in funding could allow tenants to transfer deposits from one tenancy to another, reducing the average amount that tenants must pay upfront when moving home by £817.

The fund would also provide £6.7m for a separate deposit guarantee scheme for renters in greater financial difficulty, and any surplus could be returned to tenants.

Generation Rent deputy chief executive Dan Wilson-Craw said: “Renters face many disadvantages in the housing system. Around half lack savings, making moving home a more painful process than it should be.

“Limited access to legal support means it is hard to take action if your landlord is failing to keep your home safe.

“So it is a scandal that the billions of pounds of renters’ money tied up in deposit schemes is not being used to improve the experience of renting and, in many cases, sees landlords and letting agents collecting the interest.”

The government is reviewing the deposit protection system in England and Wales in the run-up to the renewal of the deposit schemes’ accreditation next year.

A Ministry of Housing, Communities and Local Government spokesperson said: “Our landmark Renters’ Rights Bill will level the playing field and give tenants greater security in their homes by banning s21 no-fault evictions, empowering tenants to challenge unreasonable rent hikes and banning unfair bidding wars.

“We are currently reviewing the deposit system to ensure it works effectively and identify how we can improve outcomes for tenants.”