Deposit replacement schemes boost offerings to gear up for tenant fees ban

Deposit replacement schemes have begun bolstering their propositions in a bid to add more value for letting agents and landlords with the tenant fee ban due at some point this year.

Franz Doerr, co-founder of flatfair, told EYE that the business is developing technology beyond just the deposit alternative, while Zoopla-backed Zero Deposit has launched a service dedicated to independent agents, having previously focused on larger brands.

Doerr said flatfair is being used by agents such as Spicerhaart and Chestertons as well as large private landlords including Bedford Estates.

Under the proposition, tenants pay towards a ‘flatbond’ – a week’s worth of rent – before the tenancy starts. In return for this, landlords are covered for 12, rather than the usual six, weeks of rent.

Everything is managed on flatfair’s online portal, and as with a normal deposit, the tenant remains liable to pay for any damages costing up to the equivalent of six weeks of rent. The idea is that they are thus incentivised to behave responsibly.

Flatfair offers independent resolution by H F Resolution. If a tenant is found to owe money and fails to pay, landlords also get an option for flatfair to buy the debt from them so they are not out of pocket and the scheme then pursues the money itself.

Doerr said: “We are developing additional products that we will launch alongside our alternative deposit product.

“These products will help agents and landlords with their costs once the fee ban comes in.

“We are working on the basis that the ban will be introduced in April.”

Meanwhile, Zero Deposit founder Jon Notley said almost 850 UK letting agency offices now offer the Zero Deposit Guarantee, which includes brands such as Connells and Knight Frank.

Tenants using the service pay the equivalent of one week’s rent for a Zero Deposit guarantee, which is non-refundable and gives the landlord effectively the same cover as a six-week tenancy deposit. This guarantee is backed by insurer  Great Lakes Insurance SE and is a regulated financial product.

The tenants remain fully accountable for any damage or unpaid rents. Any disputes over claims by the landlord can be sent to TDS, who will review the evidence and provide a fair adjudication. Zero Deposit pays the landlord quickly in the event of an approved claim.

Notley said: “Tenancies covered range from lower value lets in the regions through to high value London apartments. The product is appealing to all segments of the market with every age and property type covered.

“Tenants hugely appreciate the financial freedom our product offers, while agents and landlords are attracted to the genuine protection and credibility of our fully FCA regulated guarantee, with all of the safeguards that brings.”

“A big development in recent weeks is the launch of Zero Deposit’s Independent Agent product, which gives smaller agents access to the product for the first time.

“We already have 30 independent agents live in our launch group, and many more who have expressed interest in joining our network. Having rolled out to a number of larger agent groups in 2018, it is great to now be able to offer the product to the whole agent market.

“This is especially relevant given the news that cash deposits are likely to be capped at five weeks’ rent, whereas our product offers landlords six weeks’ protection, along with referral commission to agents.”

It comes as the Tenant Fees Bill will return to the House of Lords for its third reading on January 15 before any amendments are considered by both peers and MPs.

Depending on how long this takes, the tenant fee ban could come in during either April or October, bearing in mind that compulsory Client Money Protection insurance will have to be implemented first.


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  1. DarrelKwong43

    I was somewhat sceptical of the zero deposit schemes initially, but one of the big positives, is the removal of deposit compliance from the equation of risk for a letting agent. I have recently dealt with a number of truly mind boggling court decisions on the interpretation of deposit legislation, that I would encourage all agents to seek alternatives to not taking a physical monetary deposit.  

    1. Gloslet

      I remain unconvinced of the benefits of these deposit replacement schemes.

      Yes, it removes the deposit compliance issues – and as you say the truly stupefying adjudication decisions that are being made, but have you dealt with the ‘tenants’ insurance company yet trying to wriggle out of an end of tenancy claim being made against them ?

      Also, are tenants being made fully aware that in instances they remain liable for losses incurred by the insurance company even though they have paid for a ‘protection’ policy ?

      1. DarrelKwong43

        In theory, if they are using MyDeposit adjudicators, the decisions about an end of deposit claim, should be no better/worse than the current deposit system.
        I am really focused on the deposit compliance side, where the law states you must do A, B and C.  If you dont this correctly, then you are potentially liable to a financial penalty and/or the landlord may struggle to get possession. 

  2. HIT MAN

    By using these companies is creating another side line business to take fees from landlords, tenants and agents, I understand that agents may receive some form of commission/introduction fee but find this immoral when the government are trying to abolish tenant fees. I’m with Gloslet on this, while it may remove the compliance issues it may also cause more issues, my view is to stop looking at ways to get around the system and manage the tenancies properly.    

    1. DarrelKwong43

      its about managing risk….

      Personally, I would not take a deposit full stop.

      If you want to take a deposit, then you need to decide which is the best option for your business and client landlord.

  3. Lil Bandit

    I did some research into flatfair last year when they approached me. They aren’t even regulated by the FCA and don’t have proper insurance backing, if they go under any agents using them are left completely exposed. How stupid do they think we are? Makes you wonder about the compliance team at Spicerhaart, any man and his dog can see the flaws in their model.

    1. jeremy1960

      This has been my worry from the day these schemes started to crop up, who carries the can when the schemes find it’s not viable,  what happens after a couple of years when the schemes double premiums once they see level of claims and work involved? As agents we have a duty of care to our landlords, imagine that conversation when you break the news to your landlords that the scheme is bust, there’s no deposit and the tenant has left having done no cleaning and caused damage as well as not paying final rent!


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