Zero deposit scheme?
9:35 AM, 4th May 2023, 3 years ago
20
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Hello, is the zero deposit scheme a better option than a normal 5 weeks deposit? I have an agent looking for a tenant and he’s pitched both options as available to an incoming tenant.
I am looking for pros and cons for each from a landlord’s perspective, please.
How do I satisfy the deposit protection element (in case of eviction proceedings)? How easy is it to make a claim back to Zero Deposits?
Apparently each year the tenant has to pay £17 to insure them for the benefit of using the scheme, but I suppose it means they don’t have to fork out 6 week’s deposit upfront. I am concerned though if the tenant doesn’t pay this £17 annually how is the cover continued?
I normally just ask for 5-weeks deposit and then protect via DPS. I am in full control. Zero deposits insure me for a 6-week deposit instead.
TIA,
Reluctant landlord
Tags:
landlord, zero deposit scheme
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Member Since August 2016 - Comments: 1190
1:17 PM, 11th May 2023, About 3 years ago
Excellent. Thanks for clarifying Ian appreciated.
Member Since September 2018 - Comments: 3508 - Articles: 5
2:49 PM, 11th May 2023, About 3 years ago
Reply to the comment left by Ian Narbeth at 11/05/2023 – 12:16
ahhhhh – clarity as ever – thanks Ian
Member Since October 2020 - Comments: 1137
2:58 PM, 11th May 2023, About 3 years ago
The agents get commission for recommending these insurance schemes, which I think accounts for their proliferation. In my view they are a very poor deal for most tenants.
Member Since July 2013 - Comments: 1996 - Articles: 21
3:04 PM, 11th May 2023, About 3 years ago
Reply to the comment left by David at 11/05/2023 – 14:58
If the choice is between sofa surfing with friends/being homeless and paying a bit extra, some would say it’s a good deal. Of course insurers have to charge to cover their risk.
Member Since September 2018 - Comments: 3508 - Articles: 5
3:12 PM, 11th May 2023, About 3 years ago
Reply to the comment left by Ian Narbeth at 11/05/2023 – 15:04
…but if landlords are going to be in direct breach of the TFA (and all the problems this incurs) then how come they still exist?
I presume the whole thing works on the basis of the LL not knowing about what the LTA says AND agents not telling them about the possible breach?
If that’s the case then the Agent would surely be negligent? (LL recourse to Ombudsman worse case?)
Another minefield….
Member Since July 2013 - Comments: 1996 - Articles: 21
4:04 PM, 11th May 2023, About 3 years ago
Reply to the comment left by DSR at 11/05/2023 – 15:12
See my earlier answer: “The zero deposit companies exist because (a) the landlord can take out the policy and factor the cost into his rent or (b) the tenant can voluntarily offer a policy. The point is the tenant cannot be required to take out the insurance.”
Nothing works “on the basis of the LL not knowing about what the LTA says AND agents not telling them about the possible breach”. Ignorance of the law is no defence.
Member Since August 2016 - Comments: 1190
4:06 PM, 11th May 2023, About 3 years ago
“The tenant can voluntarily offer a policy”. So as long as landlord doesn’t request it and it’s offered by tenant would seem to be fine then. However …… I’ve seen letting agents adverts saying such policy is available. The agent is acting for the landlord so could such advertising could be interpreted as landlord’s agent asking tenant to take out a policy ? Which would be same as the principal (the landlord) asking ?
Member Since June 2022 - Comments: 111
4:09 PM, 11th May 2023, About 3 years ago
Wink Wink Nudge Nudge if you know what I mean.
Member Since June 2023 - Comments: 33
4:23 PM, 13th December 2023, About 2 years ago
Reply to the comment left by Dylan Morris at 11/05/2023 – 16:06
It being offered as an option is not it being required – so the tenant can either choose to pay the standard security deposit in full upfront, or they can choose to have a zero deposit scheme, it’s totally up to them and breaks no laws whatsoever. It’s really quite simple and straight forward and there’s really a lot of ill-informed comments here.
Member Since September 2018 - Comments: 3508 - Articles: 5
5:05 PM, 13th December 2023, About 2 years ago
Reply to the comment left by Jeff L at 13/12/2023 – 16:23
I suppose the same could be true of offering up the option to the tenant for them to seek their own (paid for) rent guarantor?
There are it seems a couple of well known companies out there that offer this, but interestingly enough it seems when a claim has to be made by the LL, the feeling is that its like trying to get blood out of a stone, or that the process is very long winded and not actually geared towards assisting the LL to obtain any late rent/arrears etc.
I suppose that is what you get as ultimately is it not in the interests of the company to make it easy for the LL to make a claim, especially when the tenant is the one paying for the service (which is in reality less than the rent due and no personal comeback on them if the policy is cancelled?)