Just under a quarter of people who have rented through the private sector who paid a deposit to their landlord during the past five years say some or all of it was withheld at the end of their tenancy, and of these just one in seven people thought the amount of money taken was justified.
There are currently around 2.2 million private tenants, around 70% of whom have paid a deposit averaging '510 each.
Citizens Advice and housing charity Shelter said landlords and their agents currently held deposits of around '800 million, but there was no regulation over how much was charged, how the money was held or what arrangements were made for its return.
The groups are calling for the Housing Bill, which is currently going through Parliament, to include the setting up of a statutory national tenancy deposit scheme to protect people's money and resolve disputes.
Out of pocket
They warned that not only did tenants end up being out of pocket if landlords failed to return their deposit, but many also faced hardship or debt as they struggled to raise the deposit for their next home.
The call comes on the day that an amendment to the Housing Bill, put forward by Labour MP for Brighton Kemptown Des Turner, calling for a national tenancy deposit scheme to be set up is being debated in Parliament.
Adam Sampson, director of Shelter, said: "Every day 350 private tenants are ripped off by rogue landlords - that's 127,000 tenants every year.
"We must protect tenants from the cowboy landlords who ride off with their tenants' money without any concern for the hardship they cause. These landlords also do great damage to the reputation of the vast majority of good landlords."
David Harker, chief executive of Citizens Advice, said: "Six years after we first raised the issue we find that far too many landlords continue to treat rental deposits as their own money, instead of money handed over to them in trust."
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My daughter and partner have just left a property, to find a larger one. The landlady has not given them any of the B#750 deposit back. There was only minimal marks on walls, i would consider acceptable wear & tear,but she is expecting to keep all the deposit to pay for decorators, and to also deduct money for the time it takes, i.e. rent for that period. They have written to her twice without reply. Meanwhile having found the deposit for the new house, it has left them without any of the white goods for their kitchen, no fridge, cooker, or freezer, and this will be the situation until,or if, money is returned. She is expecting a baby in two months, and really does not need the hassle!!!