The latest research by rental deposit replacement scheme, Ome, has looked at the total sum used as rental deposits and how this compares to the levels of investment pumped into the economy, both at the top line and in various sectors.
Ome’s research shows that last year just over £5.2bn was held in rental deposits across the letting sector, with 4.6m tenancies seeing the average tenant fork out £1,139 to secure a rental property.
Over the last year, total business investment in the UK reached £198bn and while the money used as traditional deposits only equates to a small percentage of that, if it was available to the wider economy it would single-handedly boost UK business investment by 2.6%.
While 2.6% may sound insignificant, looking at rental deposits as a proportion of investment into sub-industries and sectors puts the huge sum into perspective.
The £5.2bn held in traditional deposits last year far exceeds investment into a number of sub-industries and was more than 10 times the sum invested into textiles, leather, clothing and footwear and six times the sum invested into solid fuels and oil refining within the UK.
It also exceeded the sums invested in metals and metal goods (182%), food, drink and tobacco (137%), health and social work (135%), hotels and restaurants (132%), other manufacturing (120%) and chemicals and man-made fibres (119%).
Investment in the UK real estate sector is quite rightly much larger than most of these other sub-categories and over the last 12 months, there has been £35bn pumped into the UK property market.
However, this huge sum of rental deposits being held across the nation is still notable enough to equate to 15% of this total investment.
Co-founder of Ome, Matthew Hooker, commented:
“It’s quite astonishing when you consider the total sum used as rental deposits across the nation and especially when you compare this with investment into the UK. It really puts into perspective just how much money it actually is.
"To think it exceeds the annual investment seen in a number of UK business sectors, and nearly three percent of total UK business investment in the last 12 months, is remarkable and makes you think how useful these huge sums of money can be when put to good use.
"Of course, we appreciate that these unutilised tenant funds are unlikely to be ploughed into the UK business sector via investment if they weren’t tied up, but it does demonstrate the huge sums being held by landlords and agents and the sheer size of financial security the nation’s tenants must collectively put down when looking to rent.
"Just think what else this money could be doing and the good use the additional cash flow could have to a tenant’s rental wellbeing? Hopefully, as we move more and more towards tenant focussed replacement schemes such as Ome, we may one day find out.”