Landlords and Tenants Split Over New Tenancy Deposit Schemes
Both landlords and tenants are split on the effectiveness of new insurance-based tenancy deposit schemes. A number of schemes have recently been launched that aim to resolve tenants’ difficulties in raising the costs of a deposit by instead offering a monthly insurance payment.
Research conducted by leading letting agent Upad.co.uk revealed concerns from both landlords and tenants regarding various aspects of these schemes. Specifically, landlords were concerned that the insurance would not cover them fully for repairing any damage at the end of the tenancy.
In addition, some tenants felt that despite sometimes having to borrow money to pay their deposit, at least in the majority of cases they would get their deposit back, whereas paying for the replacement insurance would see them making payments they’d never get returned.
However, tenants overall were more in favour of, and enthusiastic about, the schemes than landlords were.
Perhaps most alarming is that less than 10% of both groups were even aware these new schemes existed.
When these new tenancy deposit schemes were put to them, landlords were unconvinced they would have any real impact:
57% claimed they had never had a tenant struggle to raise a deposit.
Only 35% thought finding tenants would be easier if they offered this scheme as an alternative to requesting a deposit.
Only 14% thought an insurance deposit scheme was a better idea than taking a deposit.
Although a higher proportion of tenants appeared to support these new schemes, in some cases those in favour were still in the minority:
35% thought an insurance deposit scheme was a better idea than taking a deposit.
37% said they would definitely rather pay the monthly insurance than a deposit.
62% had no concerns about paying a monthly sum instead of a deposit.
Speaking about these findings, portfolio landlord and Upad founder and CEO James Davis said, “Alternatives to paying one-off deposits are always welcome, and these schemes are a great idea.
“Immediately, tenants will be free of the struggle of having to raise a deposit for a new rental before they have got their existing deposit back, and those who are unable to raise a deposit at all, or have no means of borrowing the money, could find themselves able to rent a far wider range of properties than they previously could.
“I am definitely in favour of such schemes and hope in the coming months a greater proportion of landlords will also take this point of view.”
Since conducting this research in 2017, Upad has partnered with Zero Deposits.
Upad landlords can make their rental property more attractive by allowing tenants to rent deposit free, alternatively allowing tenants to purchase a zero deposit guarantee. A zero deposits guarantee costs the equivalent of one weeks' rent, saving tenants money but still covering landlords to the same value a traditional deposit would.