Has anyone used a Zero Deposit scheme?

Has anyone used a Zero Deposit scheme?

0:03 AM, 6th July 2023, About 8 months ago 16

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Hello, has anyone used a Zero Deposit (ZD) scheme? I’m coming into the ZD scheme from fresh having always taken traditional deposits up front so I’m wary of the scheme at the moment. I have been advised it might be a way of getting tenants to come forward.

Despite the housing shortages, I rent in an area of not great wealth so tenants may not have the upfront cash for a deposit. I may need to look into this.

While it seems on paper straight forward – the ZD scheme covers 6 weeks’ worth of deposit, as the policy is taken out by the tenant, I can’t work out how the tenant pays for this and what happens if they themselves cancel the policy.

I assume if the policy is cancelled immediately so does any cover the LL had – plus no deposit. Then what?

Does anyone know?

Thank you,


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9:41 AM, 6th July 2023, About 8 months ago

Very interesting as never personally heard of this.
I guess in the pre-AST stages can ask them to pay for the cover ANNUALLY to run in line with the AST and also give Landlord Authority to speak with insurers and insist that the policy can NOT be cancelled or amended during the AST to another address without landlord consent. If tenant cancels and move then policy pro-rata refund etc.
In any case we are now considering not taking deposits as risks are higher than the value; Especially in our area.
Also if proper credit checks done and guarantors in place there is small claims for <£10k.


10:07 AM, 6th July 2023, About 8 months ago

Flatfair provide this - google them to get details


10:07 AM, 6th July 2023, About 8 months ago

Just read up and this seems excellent alternative.
We will experiment with our next tenant as make really good sense.
Also cannot be screwed by other fines etc
Seems solid to me 🙏


10:27 AM, 6th July 2023, About 8 months ago

If the tenant pays the fee then this sounds precariously close to contravening the tenant fees act.

David Smith

10:33 AM, 6th July 2023, About 8 months ago

With ZD the tenants have no Skin In The Game they have paid their premium so nothing to loose.
At the end of the tenancy you will be left with a damaged property giving you the hassle of making an insurance claim that might not cover everything.

ZD go against the very idea of a Holding deposit.

I personally wouldn’t go near these.


11:34 AM, 6th July 2023, About 8 months ago

I have 2 flats via the Flatfair scheme and they have both been there 3 years now. Every 6 months I get an email from Flatfair asking me to complete the form online, is the AST renewed or periodic, are there any arrears and upload a new rent schedule. They then extend for another 6 months. I haven't had to claim on one yet, so don't know what that is like, but on the face of it seems ok, but I won't know until I need to make a claim, which hopefully is never.

David Smith

11:40 AM, 6th July 2023, About 8 months ago

Reply to the comment left by TheMaluka at 06/07/2023 - 10:27
ZD doesn’t fall foul of Tenant Fees Act because it’s offered as an alternative and not compulsory.

Freda Blogs

12:29 PM, 6th July 2023, About 8 months ago

I believe letting agents are incentivised to offer such schemes as they get a commission, and in an attempt to lure in prospective tenants.

Is a tenant who cannot fund a deposit a suitable tenant for your property? As others have mentioned, they have no skin in the game, and no incentive to keep the property well.

Really Reluctant Landlord

13:05 PM, 6th July 2023, About 8 months ago

I looked into this as I had a prospective tenant want to use it. The companies I looked into that they wanted to use, seemed ok. But, it’s basically insurance that the tenant buys year by year. So whilst I don’t think they can cancel it during the year (in case they wanted a refund so they had some money), you do have to rely on the tenant buying the insurance on the deposit each year and that’s where it fell apart for me. No one could be sure they would continue to purchase it, because, why would they? There’s no benefit to the tenant after the initial payment to secure the tenancy and also, it only covers the rent. Not damage etc.


13:44 PM, 6th July 2023, About 8 months ago

Reply to the comment left by Geenie Nash at 06/07/2023 - 13:05The tenant does have skin in the game because if they damage the property at the end of the agreement and are deemed liable the ZD company will pay the landlord and go after the tenant for the money. If the tenant doesn’t pay the annual renewal fee every year and still remains in the property the landlord remains protected and the tenant will be chased for the renewal fee just like any other debt. They can’t cancel unless they leave the property. I personally can’t see any obvious downsides when compared to a traditional deposit system. I’ll keep an eye on this one to consider for the future.

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