One in six landlords are not properly protecting the deposits held on their properties, with over £500m being held incorrectly, according to research by money.co.uk and the Centre for Economics and Business Research (CEBR).

The research found that 15% of landlords are sitting on an estimated £514m of unprotected deposits despite being required by law to protect tenants’ deposits since 2007, with around £3.2bn being held in tenancy deposit protection schemes.

Hannah Maundrell, editor-in-chief at money.co.uk, said: “Renting is a money minefield and, the problems caused by ‘dodgy landlords’ are only likely to get worse. 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.

“Renters must take control and ask landlords which protection scheme their money will be stashed in before signing on the dotted line. Existing tenants must ask for proof their money is protected if their landlord hasn’t given them the correct written documentation.”

Around one in five households in the UK are now privately rented, with the average protected rental deposit £1,040.

Alan Ward, chair of the Residential Landlords Association, said: “It is incredible that after nine years landlords are still operating without protecting deposits – ignorant of the financial risk they face as well as losing three times the value of the deposit.”

There are three schemes available for protecting tenant’s deposits; the Tenancy Deposit Scheme, My Deposits or the Deposit Protection Service with each scheme having a system of independent adjudication for use in the event of an end-of-contract dispute.

It appears approximately 284,000 landlords are not complying, leaving them open to prosecution. This could leave them open to fines of up to three times the value of the deposit, but they could also lose their right to use a Section 21 notice to regain possession.