Reposit, first of the tenancy deposit replacement schemes, has returned to the market – declaring that it never really went away.
Co-founder Jude Greer said it had merely “paused” its product while it worked on its development and – importantly – carried out analysis on tenants’ behaviour when the tenancy ended.
The firm also used its ‘down time’ to work with the FCA Innovation Hub.
Greer told EYE: “It was a strategic decision, but certainly it wasn’t easy being quiet when people were saying we had gone out of business.
“That absolutely wasn’t the case.
“Whilst numbers were fantastic and both landlords and tenants were happy, the market had become more competitive.
“We made a strategic decision to pause and work on our product and offering, analysing the check-out and claims data of our initial tenant customers.
“Efficiency in dispute resolution and the check-out for all parties involved will be the key area where our sector is judged.
“Having had hundreds of tenants leave properties via Reposit for just over a year now, the lessons we’ve learned and improvements to the system are invaluable.”
Reposit, founded in 2015, allows tenants to purchase a ‘reposit’ with one week’s rent plus an annual fee of £30, payable if they stay more than a year in the property.
The landlord becomes a named beneficiary on Reposit’s insurance policy and is protected for up to six weeks’ rent for anything a conventional deposit would cover.
Questions have been asked, however, about tenants’ behaviour when replacement schemes are used. Does the tenant – knowing that the money they have paid is, unlike a conventional deposit, always going to be non-refundable – have less respect for the property when they live in it?
In short, do they leave it a tip and then refuse to pay for any damages or cleaning up – costs which can be deducted from a conventional deposit?
Reposit’s analysis found some reassuring results: 17% of ‘reposits’ had some kind of charge, compared with 30% of traditional deposits; there was a 4% default rate, where the tenant had not paid for damages or cleaning and which Reposit’s insurers had to settle; and there was a 2% dispute rate over what was payable – the same as with conventional deposits.
This morning Reposit has announced a new £500,000 investment round, with backing from Weisz Investments and Avonmore Developments, to power further expansion and the development of new products. It brings the total amount of backing raised to £950,000.
Reposit has also entered a new partnership with insurance firm Canopius.
With 200 branches now offering tenants the Reposit option, the company has also researched 1,000 tenants’ attitudes towards traditional deposits.
It found that 91% had had to pay a deposit, with 49% saying that they had to borrow money to fund it – with some even taking out payday loans.
A major difficulty was the need when moving homes to pay a new deposit before the old one had been released.
Greer said: “Everyone at Reposit has been a tenant and has felt the pain of trying to claw together a tenancy deposit to move into a new property.
“Paying for one deposit, and waiting for an old one to be released, really highlights a cashflow issue for a lot of people, and there is £4.5bn of dead cash sitting in tenancy deposit schemes.
“It’s cash that could actually have a massive impact if made available to tenants again.”
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