Independent agents flock to deposit replacement scheme months after it was opened to small firms

Several new firms have signed up to the Zero Deposit team after it was opened up to independent agents in January.

The Zoopla-backed deposit replacement scheme, which launched in February 2018, revealed several new names including Dacre, Son & Hartley (Yorkshire), Kings Group (London & Home Counties), Andrew Craig (North East), Keatons (London), Moginie James (South Wales), Michael Poole (Teesside), Paramount (London), Pedder (South East London), Watsons (Norfolk) and Northfields (West London).

It comes as the scheme marks its first anniversary since launch in February 2018.

Jon Notley, co-founder of Zero Deposit, said: “A year on from our launch, we are delighted with the progress that we have made in all segments of the letting agency market and the quality of agents that we are attracting to our network.

“We now have more than 1,300 agent offices live and this number is growing every week as landlords and tenants become increasingly aware of the deposit replacement option that we can provide.

“Our message is clear. If agents are going to offer a deposit replacement to their tenants, it is vital that they put the best possible protections in place for their landlords. We believe that this includes ensuring that your chosen product is regulated by the FCA, with all of the associated safeguards.”

Its big-name users include Connells, Knight Frank and Foxtons.

Meanwhile, Reposit, which relaunched in the middle of 2018 after getting financial backing from Weisz Investments and Avonmore Developments, said its scheme was now being offered by 350 agent branches at brands including Pattinson, Martin & Co, Hunters and Northwood, as well as a range of independents.

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12 Comments

  1. jeremy1960

    This week a landlord who has been using an agent for almost 20 years and has 5 properties under management with them crossed the road to our office as his agent had written to him advising that they would be using the zero deposit scheme for all of his properties moving forward.

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    1. Jay2Oh61

      It’s my view that within 18 months zero deposit insurance will be the norm.

      Landlord’s will have no choice to accept  the change otherwise will lose out; Rightly or wrongly Tenant choice & security will dominate the future in the PRS.

      I understand you’re not going to turn business away, however Agents managing industry change with Landlords is very important and those that do it will dominate the future and achieve the best fees.

       

       

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  2. Andy Halstead

     
    What is this nonsense? Certainly not news. Why does PIE report new customer sign-ups for this firm? If sales are reported as news for Zero, it should be the same for all industry suppliers. How about reporting actual transactions, we will certainly share ours of other do.
     

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    1. Marc Shoffman

      Hi Andy, do feel free to contact me about how Let Alliance is doing. Transaction data would indeed be interesting to see. You can reach me at marc@propertyindustryeye.com

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  3. zenagent81

    Most agents and Landlords use the deposit as a filter system to weed out Tenants with weak financial circumstances, it also sends a message to the ingoing Tenant the property needs looking after. Sure, a Zero scheme has a place in the market, but should we really offer the zero option to people who can afford a deposit anyway and increase the risk profile for the Landlord and agent.

    It seems the group letting agents are pushing this zero option, I suspect they are trying to make up the shortfall in Tenants fees by obtaining a backdoor commission payment, is it fair to the Landlord clients to do this, in my opinion no.

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    1. pat123-

      The government are going to be incredibly hot on any sort of backdoor commission payments so i can’t see many agents trying that. Although i wouldn’t be too surprised if we saw a lot of reports of heavy fines for agent trying this.

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  4. Property Money Tree

    …I won’t use a zero deposit scheme until rent insurers accept it.  ATM, you have to secure 1 month’s rent as deposit (amongst other things) to quality.

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    1. KevKFH

      Rent insurers do accept it already

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  5. DASH94

    Is it the tenant that is insured or the property?   If a tenant trashes a property and the scheme has to pay out, would the property premium go up for the next tenant or would that be a marker on the tenant and they’d pay more at their next property? Does the tenant get a financial reward at the end of the tenancy if there isn’t any deposit dispute similar to an endowment policy type of thing? Apologies if this is daft question – I’m struggling to see how this can all work.   If a tenant has no financial stake in leaving a property  in good condition,  I don’t see why a lot of them would.

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    1. Expertinafield28

      The tenant pays the fee which allows the landlord to claim an amount from the scheme at the end depending on damage caused. The scheme pays the landlord whatever is owed. The scheme then goes after the tenant for that amount, trying to reclaim the money that they paid to the landlord.

      No matter what the tenant pays, they will not receive anything back at the end of the tenancy.

      I do not know if there will be a record on the tenant that would pass from tenancy to tenancy. Fees seem to suggest that they will be fixed at 1 weeks rent.

      I worry that these companies could get into financial trouble, as if they pay out landlords but have difficulty getting money back from tenants who, if they are bad enough to cause that much expense, wont have the money to pay back the zero deposit scheme anyway. I could see some of these companies going bust, then the landlords would have no recourse from a bad tenant.

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      1. DASH94

        So pretty much the same as a landlord trying to pursue extra damages from past tenants under the current system?    Good luck to them with that!
        I think I’ll be sticking with the cold, hard cash option for as long as it’s available.
         
         

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  6. drasperger

    In the early stages of this new “product” in the market, surely the applicants attracted to rent a property offering it are likely to include all of the “high risk” potential tenants….. I fail to see how this can be in my client’s interest?

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