High demand from tenants for zero deposit schemes
Over half of tenants surveyed would be interested in an alternative approach to tenancy deposits, such as zero deposit schemes, letting agent Your Move has found.
This is where the tenant may pay a non-refundable fee of one week’s rent to move in, rather than an upfront deposit.
The fee acts as an insurance guarantee for the landlord. Should the tenant be responsible for any loss or damage the scheme will pay the landlord compensation and recover the costs from the tenant directly.
Helen Buck, executive director for Estate Agency for Your Move’s parent company, LSL Property Services plc, said: “There is clearly demand for an alternative to cash lump-sum deposits.
“With more and more people now choosing to rent, it’s increasingly important that lettings agents are able to cater to tenants of all types, providing them with both choice and flexibility.
“At Your Move we’ve already made a zero-deposit scheme available to offer even greater choice to our landlords and tenants and ultimately allow them to realise their ambitions within the rental market.”
Of those surveyed more than half who were considered to be either ‘Budgeting Families’, defined as those aged between 25 and 44 years with children at home, or ‘reconciled with renting’. This is defined as aged 45 and above and who are most likely to be renting due to a change in personal circumstances.
In addition, 70% would be influenced by the choice of such schemes when deciding whether to rent a specific property.
At present, British tenants in assured shorthold tenancies (ASTs) are required to pay an upfront lump sum deposit to their landlord or lettings agent, who in turn is responsible for protecting the deposit in a government-approved scheme.
The government has confirmed that by 1 April 2019 all property agents will be required to be part of an approved Client Money Protection Scheme.
According to the Tenancy Deposit Scheme – one of the approved government-backed deposit schemes – the average rental deposit in England and Wales is currently £1,110.