Hundreds of thousands of private tenants feel cheated out of millions of pounds by rogue landlords who refuse to pay back rent deposits when they move out, according to new figures released this week.

A Mori survey commissioned by Citizens Advice found that a quarter of private tenants (24 per cent) who had paid a rent deposit within the past five years had had all or part of it withheld at the end of the tenancy. Of these, only one in seven (14 per cent) felt that there was justification for withholding as much of the deposit as required.

Adam Sampson, Director of Shelter, said, “Every day 350 private tenants are ripped off by rouge landlords - that’s 127,000 tenants every year.”

The two groups are calling on the government to include the setting up of a statutory national tenancy deposit scheme to protect people's money and resolve disputes as part of the Housing Bill.

Currently deposits worth over £800 million are held by landlords and their agents, with no regulation over how much is charged, how the money is held, or what arrangements are made for its return.

The charities warned that not only do tenants end up out of pocket, but many face hardship or debt as they struggle to raise the deposit for their next home. Tenants simply have to write off the loss or face lengthy and costly court action, where a judgement in their favour is still no guarantee they will get their money back.

A national rental deposit scheme would provide an independent banking system with a built-in mechanism for settling disputes locally, ensuring the swift and safe return of deposit money. The scheme would be self-financing through interest generated by the money it holds in bond.

Citizens Advice Chief Executive David Harker commented: “… far too many landlords continue to treat rental deposits as their own money, instead of money handed over to them in trust.”

“Many do not even bother to give tenants a proper reason for failing to pay it back. It is high time this scandal was ended, and we therefore welcome the Governments commitment to legislate to protect tenants money.”