No Deposit renting, also known as deposit alternatives, are schemes where tenants can choose not to pay a deposit (usually 5 week’s rent) and instead pay a non-refundable fee of one week’s rent*.
In turn, the landlord is protected for up to 8-week’s rent in case of any rent arrears or damages. Different providers have different ways of covering landlords, but at Reposit this cover is insurance backed, so landlords can be comfortable that they will be paid in the event of any charges.
No deposit renting was recently featured in the government’s ‘How to rent guide‘ as a viable alternative to cash deposits.
No deposit renting for tenants
No deposit renting is great for tenants because they don’t need to stump up for a cash deposit. The average Reposit fee in 2023 is £242, with an average 5 week cash deposit standing at around £1,300.
That’s a saving of over £1000 on a cash deposit that could be used elsewhere – to help tenants pay for new furniture or generally even the cost of living. Even with interest rates close to 5.5%, simply saving the money is worth over £50 per year.
No deposit renting for landlords
Landlords love no deposit renting because they have greater cover than they can find with a 5 week deposit. With 8 weeks cover, they see 60% more cover than with a cash deposit. We see that in 14% of instances, 5 week’s cover isn’t enough to satisfy the claims at the end of the tenancy and the landlord is left out of pocket.
No deposit renting also helps landlords rent their properties faster and reduce void periods. No deposit or ‘deposit free’ properties tend to be more attractive to tenants and often let faster.
It’s important to note that some, but not all no deposit companies are authorised by the Financial Conduct Authority (FCA) and are protected by the Financial Services Compensation Scheme (FSCS).
This means that landlords can be assured of getting their money back – whatever happens. It’s important to check that your deposit alternative provider is indeed, FCA authorised to make sure you’re adequately protected.
No deposit renting for agents
No deposit renting is great for agents because it allows them to give their tenants a real choice on their tenancy deposit option, as well as provide their landlords with superior cover at the end of the tenancy.
It also allows them to diversity their income streams by earning fully compliant commission by using a deposit alternative provider.
Depending on the provider, deposit alternative schemes can revolutionise the end of tenancy process for agents. Some providers leave the process up to the agent, landlord and tenant, but at Reposit, our state of the art platform allows easy management for the agent.
It’s simple for agents to add charges and notify tenants, as well as look to reach settlements, all through the Reposit platform. On average, letting agents save around 80 minutes per tenancy at the end of tenancy process.
Some no deposit platforms offer an independent adjudicator to oversee disputes between tenants and landlords which are resolved within various timeframes. At Reposit, we’re pleased that our adjudication turnaround is as short as 14 days.
Who is eligible for deposit alternative schemes?
Different providers offer differing eligibility criteria for who is eligible for no deposit renting. Some providers insist tenants must pass referencing through specific providers. Others, like Reposit, look for tenants to either pass referencing, have a guarantor or pay rent in advance.
It’s important to remember that letting agents must ensure that a thorough inventory is completed before the start of the tenancy to ensure a fair and smooth end of tenancy process.
What should you look out for in a deposit alternative provider?
When considering a deposit alternative provider, it’s important to consider the following:
FCA Authorisation
Ensure that the provider is authorised by the FCA and covered by the FSCS. This allows landlords to feel completely confident that their money is protected – whatever happens.
Level of cover
Not all deposit alternatives provide the same level of cover for the landlord. Some only cover up to 6 weeks rent where as others have certain levels of protection for damages or rent arrears. At Reposit, our cover is 8 weeks, for everything.
Dispute resolution timeframes
It’s important to check the timeframes for resolving disputes, whether you’re a tenant, landlord or a letting agent. Some deposit alternatives (and cash deposits) can take weeks to resolve disputes, but with Reposit this sits at just 14 days.
Tenant setup fees
Make sure you know the true cost of the deposit alternative to the tenant. Some providers charge setup fees, or add VAT to their fee. There can be minimum and annual fees to consider too. At Reposit, we have a minimum fee for £150 on our deposit alternative, and there is an annual fee of just £30 per year on the tenancy as a whole. So if there are two tenants, this would come at a cost of £15 each.
How is the end of tenancy process managed?
Some deposit alternatives offer a seamless end of tenancy process which makes life easy for the letting agent, landlord and tenant alike. Others, however, leave the tenant and landlord to deal with the process themselves.
With Repoist, there’s no cost for letting agents for using this software, it’s all part and parcel of using us as a no deposit solution.
If you’d like to know more about Reposit as a letting agent, landlord or tenant, don’t hesitate to contact us.
