Deposit free renting isn’t the issue, it’s rental sector transparency

by Property 118

8:32 AM, 11th February 2020
About 2 months ago

Deposit free renting isn’t the issue, it’s rental sector transparency

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Deposit free renting isn’t the issue, it’s rental sector transparency

A BBC investigation has suggested that some letting agents are not providing tenants with the full picture when selling deposit alternative schemes, resulting in ‘hidden costs’ later being charged to tenants.

While some tenants have found themselves foul of as much as a month’s rent for not following the guidelines, these replacement schemes otherwise offer a solution to the cash flow problem of stumping up large sums for a rental deposit upfront.

Hamilton Fraser, parent company of mydeposits and recently launched new deposit replacement scheme, Ome, believes the issue isn’t with the option of deposit replacement schemes themselves, but with the more deep-rooted problem of transparency across the UK rental sector.

Eddie Hooker, Group CEO of Hamilton Fraser said: “As a supplier in the industry of both traditional tenancy deposit protection through mydeposits and one of the new, deposit replacement scheme alternatives, we consider it important to ensure that tenants have full choice as to whether to find a traditional upfront deposit or to manage their cash flow by opting for a deposit replacement product.

“However, tenants must always be fully aware of the terms and conditions of whatever choice they make. With a traditional deposit, this means reading the tenancy agreement to understand when a landlord can deduct monies from their deposit, and for a deposit replacement they understand that they will always be responsible for deductions at the end of the tenancy even though they will have paid a fee for the product.”

“My issue has never been with the replacement products themselves, rather how they are sold and by whom. I’m not sure that all products put the tenant at the heart of the decision-making process even though the law states that tenants must be offered a choice of both a traditional deposit and a replacement product”.

“But I believe the deposit replacement space has a real opportunity to not only push the changing face of the rental sector towards a tenant first mentality but to do so with a proper set of industry guidelines that hold everyone accountable to the same standards.”



Comments

Rob Crawford

21:20 PM, 11th February 2020
About 2 months ago

I offer the Blinc no-deposit scheme as an option to the tenant who otherwise is required to provide a deposit valued at 5 weeks. As there would be a conflict with the Tenant Fees Act, it is important that Agents or landlords only "introduce" no-deposit schemes as an option and do not "sell" the scheme. Similar to how they would introduce optional contents insurance cover. The contract resides between the provider of the no-deposit scheme and the tenant. As such the T&C are transferred from the no-deposit scheme provider to the tenant. All the tenant has to do is read them! The no-deposit scheme provider does have a commitment to the landlord/ agent that ensures they chase the tenant for the annual premium and to payout for any justified decapitation or rent arrears. I don't see any issues with such schemes and with the Blinc scheme the payout value is either 8 or 12 weeks - preferential to the max 5 week deposit!

Michael Barnes

0:18 AM, 12th February 2020
About 2 months ago

"the law states that tenants must be offered a choice of both a traditional deposit and a replacement product”

That is just not true!!!!

Monty Bodkin

10:16 AM, 12th February 2020
About 2 months ago

Reply to the comment left by Michael Barnes at 12/02/2020 - 00:18
Scary isn't it.

Even scarier when you consider such experts will probably be consulted on this next wheeze;

“Millions of renters will benefit from a new lifetime deposit scheme, which will see their hard-earned deposit move with them from property to property–giving tenants more control over their lives and keeping more of their cash in their pocket,” the ministry of housing, communities and local government said in a press release.

What will be the penalty for landlords refusing to participate in that?
Six times the deposit plus £30000 fine and a criminal record is my guess.


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