Fronted has today launched its Fronted Deposit product, a new deposit-free renting platform, after gaining FCA approval.
The firm’s CEO Jamie Campbell said Fronted, a ‘renter first’ product, was created after seeing what they saw as a lack of options available that are built for renters.
Campbell claims that all other deposit alternative products in the market are either built or owned by estate agents or align their interests to landlords.
Fronted, which will charge 12.5% fixed interest on their Fronted Deposit scheme, says it has already seen a lot of interest in its new product.
Campbell commented: “We are getting 1,000 applications a month coming through the site; much more than we thought we would get at this stage.
“We have launched ahead of raising capital to help renters move without needing to save up five weeks’ rent for their deposit – so they can act on their desire to move.”
“Small businesses and startups have had a tough year,” Campbell continued. “Like other business owners we were forced to put plans on hold, but now we are launching with more demand than we can serve and a rental market that needs Fronted more than ever.”
There is not enough detail in this article to figure out whether or not 12.5% fixed interest is actually a tenant fee and therefore not allowed.
12.5% of what? is it 12.5% of the usual deposit or 12.5% of the months rent? Who pays the 12.5%?
Generating applicants for letting properties isn’t a huge issue; lettings usually creates it’s own problem of too many applicants so is this creating a new tier of applicants; tenants who want to rent but can’t afford a deposit?
There might be a great solution here but I can’t figure out what we’re being told
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Tenant Fee Ban does not apply in this instance Robert- as this is a product a Tenant would choose of their own volition to finance a cash deposit. This is a Tenant loan- they pay the charges.
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Hi Robert; Fronted co-founder here.
12.5% is a flat rate for everyone and our deposit term is 12 months. It is payable by the renter but we have no early repayment fees – particularly because we can see how much of a blocker to moving ‘bridging’ a deposit can be – sometimes it just not worth the hassle.
Landlords and agents receive a cash deposit – just like usual – which is protected in one of the three schemes. We wanted to as closely replicate the habits of the market as possible: providing options for renters that works for any property and which gives landlords the protection they are used to receiving.
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Thank you for the reply JAC that helps a lot understanding the offering. I’m personally not convinced deposits are worth all the tarradiddle and haven’t personally bothered with them for 10 years after the deposit scheme required me to do more time worth of work to keep the deduction from the rent.
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Hi JAC
In essence you are advancing a loan to the tenant. a credit facility based on upon the Credit Agreement modelled on Insurance Premiums. Payable to a maximum of 12 months
Presumably, if the fixed period of the agreement is for 6 months, is the loan, then advanced over 6 months?
In major cities where rents are high, this could add a significant monthly cost affecting affordability. Rent of £1000 with 5 weeks deposit over 6 months could cost over £200 per month.
The APR quoted on your website is 12.5% which ironically is cheaper than the incorrect 12.5% flat you referred to in your response.
Taken, not everyone can secure a payment plan with insurance companies due to characteristics used by underwriters, Is this product available for everyone ?
You say that you only carry out a soft credit check; in essence you still look at their credit file. Is there a genric credit score that is attached to the approval process too?
Why would a tenant around £96 per month for 12 months with your scheme, when they could pay around £200 with Zero deposits in total for the year. Is not the point of Zero Deposits that you don’t have to “come up” with all the cash ? (BTW, I not a fan of Zero Deposits either)
Im sorry if I missed the USP of this product, but what is it?
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I suppose it a must be a kind of loan to the applicant as I can’t see any agents or landlord I know accepting a third party payment. Having a deposit and rent shows affordability and commitment as much as protection.
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The USP of the product seems to be that it is ” renter friendly ” whereas rival products are deemed to be landlord friendly . Haven’t tenants had enough support at the landlord’s expense ? Given that landlords have already taken a huge bashing from the recent changes in legislation ( not to mention those still in the pipeline ) why would an agent want to subscribe to a product which is openly against the interests of his client ? As Russell 121 says, if a tenant can’t even afford to pay a deposit of 5 weeks’ rent, that doesn’t bode well for them being able to pay the rent when a ” rainy day ” comes. Call me old-fashioned but I still prefer to collect a cash deposit – at least until that is banned too and Zero deposit schemes become mandatory.
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EalingDean please don’t put further ideas in politican’s little heads on banning deposits!
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So this scheme appears to be a loan/saving scheme for tenants with the company fronting the deposit. It looks as if the company work with estate agents. It seems to suggest the company pay over the deposit to the agent/landlord. As a Landlord I see the deposit as showing the tenant is responsible in handling their finances. It complicates things from a legal perspective if someone else is paying the deposit and not a situation I would wish to personally be involved with. There again perhaps I am behind the times and very traditional as I will not touch the zero deposit schemes either despite they potentially offer more than 5 weeks protection. It a prospective tenant needs to take a loan to raise a deposit are they really the best tenant for me? Good luck to those coming up with the scheme.
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The fact is, as we all know, a lot of Tenants are forced (especially when transitioning between rental properties) to beg steal and borrow- this is nothing new. This is often put on Credit Cards, bank overdrafts or borrowed from work/friends- at the very least creating an awkward conversation and likely adding substantially more costs then those proposed by Fronted. I met up with Jamie about a year ago and must say what a lovely chap he was and I actually think what they are creating genuinely solves a Tenant issue whilst still giving Landlords what so many want/prefer- a cash deposit as opposed to a replacement product. It broadens the marketplace and broadens the options available to tenants- none of which is a bad thing. Personally feel that these guys are a welcome addition to this space.
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12.5% when we’re about to embark on a period of negative interest rates? Whatever happened to the laws of Usury?
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Blimey, tenants can’t afford a deposit ….. then can’t afford the rent. Someone else providing it (charities already do this) has shown that these tenant are the first to get into arrears. Therefore we are not talking PRS tenants in PRS but SRS tenants sliding under the door.
No thank you, you fail credit referencing and affordability risks.
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