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Almost 300,000 landlords in the UK are still not complying with deposit protection.Getty

One in seven UK landlords are still not complying with deposit protection rules, leaving renters without third party protection and vulnerable to unfair losses when they move out, research released on Thursday (28 January) has shown.

According to a survey carried out by Centre for Economics and Business Research (CEBR) on behalf of comparison website money.co.uk, 284,000 of Britain's 1.9m landlords were not complying with deposit protection rules, leaving £514m worth of deposits unprotected.

The report indicated that landlords that deliberately disregard the legislation could together be earning up to £8.5m a year in interest on unprotected money, while leaving themselves and their tenants with no third party protection when their agreement comes to an end.

"Renting is a money minefield and with troubled times ahead for the buy to let market, the problems caused by 'dodgy landlords' are only likely to get worse," said Hannah Maundrell, editor in chief of money.co.uk.

"While many landlords are doing the right thing and protecting deposits in one of the official government backed schemes, a worrying amount of money is falling through the cracks and far too many tenants are being left vulnerable."

Approximately one in five households in the UK – which amounts to 4.6m – are now privately rented and with the average protected deposit now standing at £1,040, the total value of deposits paid by tenants and placed in protection schemes by landlords has reached £3.2bn, the report added.

However, despite the risk of fines for landlords who fail to protect their tenants' deposits, 15% are still failing to do so and run the risk of a £2,400 penalty, even though landlords can only be taken the court by their tenants. "It's not right that tenants are left responsible for taking their landlord to court if their deposit hasn't been protected," Maundrell added.

"The government needs to step in and take decisive action. Introducing a compulsory register listing every landlord that rents out property in England and Wales would be a start. This works for Scotland and Northern Ireland and it seems crazy this hasn't been brought in across the UK."

Maundrell said landlords who did not comply with regulations left themselves at risk as well, as deposit protection rules offered added security to both parties. "It's not just renters that stand to benefit from deposits being protected; after all landlords need a safeguard against renters that misbehave too," she said.

"I can't understand why any landlord wouldn't do this; it doesn't have to cost anything to place money with a tenancy deposit scheme and could save so much hassle later on."