It’s without doubt the most painful and stressful part of renting: forking over large amounts of money to keep landlords feeling comfortable.
The tenancy deposit was so abused that it took major legislation and punitive rules about returning deposits in a timely manner.
Legislative guidance is always tricky. Boris Johnson’s ‘London Rental Standard’ didn’t quite hit the mark: https://twitter.com/rentpro/status/867698819856822272
For many tenants, the fact they need to hand over one deposit while a previous landlord still holds their cash is debilitating. We all witness the stress this causes tenants.
To help, a number of solutions have come to market in just the last 12 months.
Some of these solution providers have already faced off with spats on twitter about which method is better: looking at you Curran McKay and Kristjan Byfield.
If you weren’t witness at the time, it’s well worth a read: https://twitter.com/curranmckay/status/815978914912862208
So what can tenants do instead of handing over a deposit?
If you guessed insurance, it’s certainly the most funded option: Curran McKay’s Reposit is backed to the tune of £400k and Jon Notley’s Zero Deposit Scheme has the backing of ZPG.
The product is fairly simple: instead of handing over a six week deposit that you may or may not get back, pay one week’s rent to purchase insurance for your landlord in-lieu of handing over a deposit.
Whether the claims process for these new insurance products are to landlords’ expectations is yet to be tested.
There’s no doubt that – given the choice – many tenants would prefer this option. But one thing is for certain at this point: it won’t be the tenant’s choice.
If a landlord wants a deposit, will a tenant really forgo the property? And what incentive does a landlord have for wanting insurance instead of a deposit?
A smart colleague of mine is often heard saying if the customer experience isn’t ten times better than what people normally do, then people will stick with what they normally do.
Enter Kristjan Byfield of Base Property Specialists and his new product: The Depositary.
The service hasn’t yet launched, but is clearly targeted at helping lettings agents by automating the process of administering deposits.
The Depositary has partnered with TDS, the largest deposit protection scheme, which would make it much easier for a landlord’s agent to adopt the system.
Will this be better for a tenant? If you read the twitter spat, then Byfield certainly believes it’s a win for the tenant with better communication and no need for extra fees.
In a world where legislation in England will soon mirror that of Scotland by banning tenant admin fees, reducing risk and cost will be top of mind for lettings agents.
That could play into the hands of The Depository and prevent the adoption of insurance-based deposit replacement schemes.
But then again, with Zoopla’s backing of Zero Deposit Scheme, that could make offering the choice to tenants an automated option that pays agents a commission for introductions.
Either way, tenants should win with increased choice to suit their concerns. It’s about time Generation Rent benefited from innovation.
You can view the websites of the three schemes mentioned here: