Up to 1m private sector tenants with combined deposits worth up to a £1bn are believed to be missing out on deposit protection, according to the Tenancy Deposit Scheme (TDS). The number of tenants who are exposed is set to grow rapidly as the rental market soars. The lack of protection leaves an average deposit of £1,000 for each tenancy unsecured say the TDS.

Landlords are also exposed. They are liable to a potential penalty of three times the amount of the deposit for failing to ensure the tenancy in their property is registered. Through a new website launched this week by the TDS, tenants can help themselves to protect their interests by checking on line.

Landlords relying on lettings agents, particularly those who are unregulated, can do the same to ensure they avoid legal penalties. To make these checks easy, the TDS, which is the largest of the three authorised deposit protection schemes with nearly 1m tenancies currently registered, has designed its website to be the prime tool for registering and checking tenancies.

According to the latest English Housing Survey Headline Report, the number of households renting privately rose by 1m from 2.4m in 2005/06 to 3.4m in 2009/10, when the Private Rented Sector accounted for 15.6%, nearly one in six, of all households in England. The growth in renting is still accelerating.

Failure to register an Assured Shorthold Tenancy can cost the landlord the equivalent of three months deposit. At today’s rental values, this can mean that an average penalty of £3,000 is due to the tenant.