Rental deposits held by agents equal to 15% of all annual real estate investment

February 24, 2020

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.”

 

Industry
Sub-industry group
Sector
Investment (Q4 2018- Q3 2019|)
Annual value of deposits held
Value of deposits as a % of sector investment
Total business investment UK
x
x
£198,092,000,000
£5,239,400,000
2.60%
Manufacturing > Private sector
x
x
£31,011,000,000
£5,239,400,000
16.90%
Non-manufacturing > Private sector
x
x
£161,906,000,000
£5,239,400,000
3.20%
Private sector > Manufacturing
Solid fuels and oil refining
x
£825,000,000
£5,239,400,000
635.10%
Private sector > Manufacturing
Metals and metal goods
x
£2,872,000,000
£5,239,400,000
182.40%
Private sector > Manufacturing
Chemicals and man-made fibres
x
£4,418,000,000
£5,239,400,000
118.60%
Private sector > Manufacturing
Engineering and vehicles
x
£14,488,000,000
£5,239,400,000
36.20%
Private sector > Manufacturing
Food, drink, and tobacco
x
£3,826,000,000
£5,239,400,000
136.90%
Private sector > Manufacturing
Textiles, leather, clothing, and footwear
x
£499,000,000
£5,239,400,000
1050.00%
Private sector > Manufacturing
Other manufacturing
x
£4,383,000,000
£5,239,400,000
119.50%
Private sector > Non-manufacturing
Other production
x
£32,579,000,000
£5,239,400,000
16.10%
Private sector > Non-manufacturing
Construction
x
£8,961,000,000
£5,239,400,000
58.50%
Private sector > Non-manufacturing
Distribution services
x
£16,331,000,000
£5,239,400,000
32.10%
Private sector > Non-manufacturing
Other services
x
£104,036,000,000
£5,239,400,000
5.00%
Private sector > Non-manufacturing > Other production
Other production
Electricity, gas, and water
£18,804,000,000
£5,239,400,000
27.90%
Private sector > Non-manufacturing > Other production
Other production
Agriculture, forestry, and fishing
£6,417,000,000
£5,239,400,000
81.60%
Private sector > Non-manufacturing > Other production
Other production
Mining and quarrying
£7,358,000,000
£5,239,400,000
71.20%
Private sector > Non-manufacturing > Other services
Other services
Financial intermediation
£10,540,000,000
£5,239,400,000
49.70%
Private sector > Non-manufacturing > Other services
Other services
Hotels and restaurants
£3,982,000,000
£5,239,400,000
131.60%
Private sector > Non-manufacturing > Other services
Other services
Transportation and storage
£9,702,000,000
£5,239,400,000
54.00%
Private sector > Non-manufacturing > Other services
Other services
Information and communication
£22,045,000,000
£5,239,400,000
23.80%
Private sector > Non-manufacturing > Other services
Other services
Real estate, renting, and business
£35,000,000,000
£5,239,400,000
15.00%
Private sector > Non-manufacturing > Other services
Other services
Education
£12,138,000,000
£5,239,400,000
43.20%
Private sector > Non-manufacturing > Other services
Other services
Health and social work
£3,889,000,000
£5,239,400,000
134.70%
Private sector > Non-manufacturing > Other services
Other services
Other services
£6,740,000,000
£5,239,400,000
77.70%

Properganda PR

National and local media coverage for property businesses. Journo quotes delivered in minutes.

You May Also Enjoy

Estate Agent Talk

Closing the gap on client relationships and recommendations

New research from iamproperty has highlighted the growing disconnect between what buyers and sellers want from their agent and what they experience, which could be killing recommendations from happy clients. iamproperty’s quarterly consumer survey revealed that only a third of respondents (32%)¹ would recommend their agent following their experience. With many agents relying on recommendations…
Read More →
Estate Agent Talk

Northern Ireland to expect over 25,000 new home movers

Belfast-based estate agency John Minnis has revealed that Northern Ireland is to welcome an estimated 25,000- 30,000 new arrivals from the UK and Europe over the next five years, as migration to the region reaches its highest levels in more than a decade. Recent figures show that 11,700 people relocated from other parts of the…
Read More →
Breaking News

Red tape and rising costs stifling new-build availability across the capital

The latest analysis from London estate agent, Benham and Reeves, has revealed how protracted building timelines are preventing the capital’s housebuilders from delivering the level of new-build housing stock required to meet demand, with new homes currently accounting for just 7.5% of all properties listed for sale across London. Benham and Reeves analysed the latest…
Read More →
Estate Agent Talk

UK’s new wave of ‘second cities’ offers strongest yield growth for property investors

The latest research from West One Loans has found that whilst investors may continue to favour the nation’s key cities such as London, Birmingham, and Manchester, a new wave of ‘second cities’ is delivering the strongest growth in rental yields. These emerging markets are offering investors the chance to achieve attractive returns, driven by rising…
Read More →
Estate Agent Talk

Decline in change of use further constricting housing supply

Jonathan Samuels, CEO of Octane Capital, believes that a decline in conversion projects could ultimately prevent the Government from hitting its ambitious housing delivery targets, as the firm’s latest analysis has revealed that the number of homes created through change of use has fallen sharply in the last five years. Octane Capital analysed official Government…
Read More →
Rightmove logo
Breaking News

Annual price fall driven by south, which could be harder hit by rumoured property taxes

The average price of property coming to the market for sale rises by 0.4% (+£1,517) this month to £370,257. However, average new seller asking prices are now 0.1% below this time last year following several months of muted price growth The dip in annual prices is driven by London and the south, as the south…
Read More →