A study across almost 20,000 tenancies showed deposits of five weeks’ rent did not provide landlords with enough protection in more than 10% of cases.
We found that in 14% of tenancies, landlords needed to reclaim more than five weeks of rent to cover costs such as rent arrears or damage. But during the same period, more than half (56%) of agreements ended without any costs incurred by the tenant at all.
Ben Grech, CEO of Reposit, said the study highlighted how cash deposit schemes did not always provide landlords with the right level of protection because they were capped at 5 weeks worth of rent. At the same time, tenants often struggle to find the up-front cash which is not optimal because 56% of agreements end without any costs incurred by the tenant.
He said: “Our deposit alternative product presents a better option for landlords and tenants by giving landlords more protection at 8 weeks’ worth of rent. It also helps tenants who pay one week’s rent* as a non-refundable fee instead of having to find an additional 5 weeks’ rent at the start of tenancy.
“As highlighted by this research, we have created a solution which is more appropriate for the reality of tenancies in the UK and which works more efficiently and fairly for each stakeholder in the rental process – landlords, agents and tenants alike. This is especially helpful in the current economy.”
Importantly, the tenant remains liable for any damage at the end of the tenancy, with any disputes resolved through an independent resolution service within 14 days.
Reposit’s insurance-backed product structure means that landlords are guaranteed payment in the event of a tenant defaulting on any charges normally covered by a cash deposit. Reposit is independently authorised and regulated by the FCA.
Deposit alternative products were highlighted in the updated ‘How to Rent’ guide, published by the Government on 24 March which explains tenants may be offered deposit replacement products as an alternative to a cash deposit.
Mr Grech said: “It is a great step forward, showing that deposit alternative products are being recognised as a valuable solution for the industry.
“The government stressed the importance for tenants to check if the product they are offered is FCA regulated – Reposit is currently one of only two deposit alternatives in the UK that have achieved FCA regulated status.”
