Major agent taken to task over ‘no deposit’ scheme that is not an insurance policy

This is Money, part of the Daily Mail, has criticised Leaders Romans Group for the ‘no deposit option’ scheme it introduced last year, after a single mother was left with a £1,318 bill at the end of her tenancy.

According to This is Money, tenants pay a ‘small monthly fee’ instead of an upfront deposit.

However, says the publication: “This fee does not protect the tenant from future claims, and instead goes straight into the agents’ pocket.

“This means that once the tenancy ends, Leaders then comes knocking for any claims the landlord might have – under the threat of court action”.

However, Leaders Romans Group told EYE that tenants were made aware that the scheme is not an insurance policy.

This is Money cites the case of Claire, a single mother of three, who took the no deposit option when starting a new tenancy last June.

She paid a monthly fee of £76.80 for the option.

However, she claims there were faults with the condition of the property – including a shower leak – and she decided to end the tenancy early.

In total she had paid £537.60 over seven months for the no deposit option.

After she left, she was told that the landlord was claiming £1,318, including for redecoration of the hallway after damage from the shower leak.

Eight days later, she was sent a complete summary of the charges and given until 5pm that day to pay up, or face arbitration at a further £120.

Leaders Romans Group has said that it was clear that Claire was disputing the claim, and the property manager wanted to move the case quickly to adjudication.

However, it said: “In hindsight we moved too early. However we waived the £120 adjudication fee entirely.”

Arbitration is set to go ahead, but Claire said that she is concerned her evidence must be submitted through Leaders before it reaches the independent arbitrator.

Hannah Slater of Generation Rent said: “Claire is not the only tenant in this position.

“Deposit alternatives are tempting because they reduce the upfront cost of moving, but tenants should read the small print very carefully to understand their liabilities, the claims dispute process, and whether the letting agent is getting a commission if they sign up.

“Some products are better than others but those which charge a monthly fee rather than a one-off or annual fee quickly end up being very expensive.”

Michael Cook, national lettings director for Leaders Romans Group, told EYE: “We sympathise with Claire over the issues she encountered with her tenancy of the house in Haywards Heath.

“We worked closely with her, and hard on her behalf, to try to resolve the issues she had.

“The role of Leaders as the letting agent is to liaise between the landlord and tenant. We are only able to advise both parties and act on their decisions.

“In order to ensure all tenants are clear on the terms of the no deposit option, the first line in our tenant terms (signed by Claire) reads: ‘You should read this document carefully and thoroughly.

“‘NOTICE: The No Deposit Option is not an insurance policy and the NDO does not cover any liability you as a tenant may have to your landlord for unpaid rent, damage to the rented property and/or other breaches of your tenancy for which you will remain fully liable.’”

Cook continued: “In addition, all of the paperwork we provide makes it clear that our tenants are not tied into a contract, it is their choice, and that they can move back to a traditional deposit at any point.

“All of the properties Leaders offer for let can be secured with a traditional deposit.

“A couple of weeks after the property was secured for Claire she included the following query in an email to us: ‘Also is it too late to consider the ‘no deposit’ option you offer. I have been reading the blurb on it as quite like the idea apart from the obvious reducing my costs upfront.’”

Daniel Jeczmien, co-founder of deposit replacement scheme flatair, said: “We believe the costs to the tenant should be proportionate to the benefit, and there needs to be a clear differentiation between companies who are charging tenants excessive or recurring fees, and technology firms like ourselves where tenants are charged a one-off transparent fee.”

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  1. Mark Walker


    It wouldn’t matter if it had been an insurance product. The insurance will pay the landlord then go after the tenant for the damages. There will be dozens of these cases hitting the headlines.

    1. Bless You

      Until letting agents realise they are charities and not private businesses,  this will keep happening.



  2. jeremy1960

    I told you so! This was the very scheme that I have said would go wrong from the start! As agents, we now how few tenants read and understand the paperwork issued prior to the tenancy , how many tenants even read the how to rent, many don’t even read the tenancy so what chance of them reading and understanding another load of blurb.

    From day 1 it was obvious that this was a money making exercise for the agents, one landlord showed me a letter from the agent telling him that all future tenancies would be offered zero deposit option without asking him!

  3. Eric Walker

    ‘Insurance’ is a dangerous, regulated word. With insurance you pay a premium for the insurer to take on the risk. If a tenant believes deposit replacement to be an insurance policy they won’t expect to be pursued. This is where the ‘mis-selling’ risk is. How can anyone reasonably be expected to be able to insure against their own wrongdoing?

    1. Simonr6608

      Couldn’t agree more Eric. Leaders advertise their properties with the no deposit option at the start in capitals so in my mind they are aiming that at a certain demographic and in reality taking away the tenants choice regarding deposit. I did an article about this with Ros a couple of months back.


  4. mclegal81

    I’m lost to understand what the fee of £76.80 is for. No deposit registration needed, no prescribed information…..what exactly do Leaders Romans Group do for this fee bearing in mind that the tenant nor the landlord receives absolutely nothing in return for it?

    1. cybelex

      ‘She paid a monthly fee of £76.80 for the option’ – that’s a hefty premium to pay, like, forever! [or as long as she’s in the property].

      1. DarrelKwong43

        Must have been a high rent, but if you stay at a property for 18 months then you would have paid the equivalent of a months deposit without any chance of a single penny being returned AND  still be liable for any damage. If you stayed for 4 years, then you would have pay almost three times the monthly rent for what? Nothing, zilch, apart from not having to fork out a deposit upfront.  Its akin to a pay day loan !!!!! and Leaders/Romans sell it as pay a little, live alot !!  It should really be sold as pay alot, live not alot!!

  5. Lettingsagent3

    No Deposit Option gives it away somewhat, bigger firms aren’t calling them options… they all come with small print like everything, it would be wise to understand and read the options given, regardless of “it’s the Landlords preferred option” they are entitled to an opinion.




  6. DarrelKwong43

    Nearly £600 in 7 months in fees? …that is daylight robbery. ..leader/Romans should be ashamed

  7. DASH94

    Damage caused by a leak wouldn’t normally fall under deposit deductions anyway unless she’d never re[ported it.  By the sound of it they’ve let her out of the contract early, which seems to indicate that they accepted the fault.  Why’s the agent letting the landlord chase that debt?  If it’s as straightforward as it sounds arbitration won”t decide for the landlord anyway

  8. Essjaydee51

    If leaders/Romans’ are taking a fee for a  no deposit option, surely the fee or part of it should cover an indemnity or insurance policy against the risk of a claim and that claim should be covered by the fee taker, after all, in this instance the agent is the only earner out of this scam, and for what service!!

    1. cybelex

      If they are ‘taking a fee’, they’ll have to change that model after 1st June.

      1. Tcos

        No way would this be legal when the ban comes in.

  9. DarrelKwong43

    Also if the £120 is refundable to the tenant that is a potential  deposit imho…so three times the penalty plus no section 21

  10. Woodentop

    Eight days later, she was sent a complete summary of the charges and given until 5pm that day to pay up, or face arbitration at a further £120.


    You charge for arbitration …. that is illegal and covert blackmail. As to “You should read this document carefully and thoroughly” is unlikely to be accepted for enforcing unfair terms and conditions in a contract and as the story reads ….. shameful conduct?


    “The role of Leaders as the letting agent is to liaise between the landlord and tenant. We are only able to advise both parties and act on their decisions”.   ……. So who’s contract and content was it!!!!

  11. jt45

    Zero Deposit options are this industries PPI.  Many tenants do not understand the implications involved for them and we all know that Lettings Negs will be targeted and incentivised to ‘sell’ these products to tenants when the Tenant Fee Ban comes into force.  Companies like Leaders, pay their Lettings Negs a good commission rate, they are paid percentage of the income they generate for the branch.  Their Lettings Negotiators can earn several thousand a month in commissions alone.

    When will the industry stop playing into the governments, and consumer groups, hands.  We all know that if we, as an industry, charged affordable tenant fees in the past, there would not be a Tenant Fee Ban coming in.  Instead of blaming the government and consumer groups for the mess the lettings industry is becoming, we should, as an industry, look closer to home.  WE more than played our part in creating this.



    1. WiltsAgent

      Totally agree. Not going to touch it with a barge pole. If Romans can’t see this will be disaster for them just like PPI with the banks then that’s their problem.

  12. smile please

    This company are one of the main reasons we now have a tenant fee ban.  
    The fees they charge tenants (and landlords) is frankly disgusting.

    1. Rent Rebel

      They’re really not an exception.

    2. Benfield

      Yep, totally agree on that. One of the worst culprits for excessive fees to tenants. I’m hoping they will get their come uppance these next few years, when their Landlords, who no doubt are paying at the upper end of Management Fees are squeezed more by them to replace their lost tenant income and hopefully seek out other  Letting Agents.

  13. J1

    I don’t understand why firm’s try to bend convention…….  It always ends in tears………..

    Be simple, Be better; be honest; be profitable.  Simple

  14. jeremy1960

    I do not support the idea of these schemes, they have been around for some time but have come to the fore as agents look to replace lost income. What I would say however is that if ARLA,  NALS and other trade bodies had stood up and fought the corner for their members in respect the fee ban rather than just rolling over and accepting it we would not be in this position. An unexpected consequence of government and charities interfering with our businesses and trade bodies hiding under the table!

  15. Harry Albert Lettings Estates

    This is what deposit replacement is, it’s all detailed in terms and conditions that nobody can be bothered to read.


    Why are agents held responsible for tenants who are too lazy to read the terms they agree to? Are we meant to babysit them to make sure they adult properly?

    1. Simonr6608

      These 0 deposit scheme don’t offer the tenant the protection they say they do. At least with a cash deposit the tenant has a chance of getting something back and to be honest I don’t believe the landlord is better off with them either. In the case of Romans the landlord doesn’t see a penny the monthly fee goes directly in to Romans/Leaders bank account and after 18 months or so the tenant has exceeded the cost of a cash deposit.

      “Why are agents held responsible for tenants who are too lazy to read the terms they agree to” Its down to the agent to explain the T&Cs or at least highlight any terms that may have a negative impact on the tenant. Ever wondered why the TV companies (Sky), mobile operators read out the T&Cs and ask if you understand them as well as posting them out



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