An increasing number of letting agents are offering a deposit alternative to their tenants and landlords due to the unique benefits they provide.
Although relatively new to the market, the growth in deposit alternatives has been substantial, with 56% of tenants selecting it over a traditional deposit when given the choice. But which option suits you best? That depends on a variety of factors.
Financial Situation
Moving into a new home can be a really expensive time. Traditional deposits currently cost tenants an average of £1,696. Combined with the first month's rent, tenants are looking at an average outlay of £3,166, which for many, is a significant financial burden.
Tenants using flatfair No Deposit save an average of £1,200 on their upfront move-in costs, with many saving much more. This money could be better spent on new furniture or adding to your savings pot for a deposit on your own home.
On the other hand, some tenants may prefer to pay the larger sum of money for a traditional deposit, confident that if they’ve looked after the property, they’ll receive the sum back. It’s important to note though that this is often not the case, as approximately 40% of tenancies end in charges, and tenants can wait weeks; sometimes months, for their deposit to be returned after deductions.
Flexibility to Relocate
There may be cases where you need to relocate quickly, for work or personal reasons perhaps. Deposit alternatives provide greater flexibility in these situations, as your money isn’t locked away in a deposit scheme. This financial freedom can make the transition to a new home smoother and quicker as you won’t be waiting for your previous deposit to be returned.
While most traditional deposits are returned within 10 days, the process can often be delayed by disputes over end-of-tenancy charges, potentially slowing down your ability to move into a new property.
Convenience and Speed
One of the key benefits of deposit alternatives is that you don’t need to source large sums of money for a five week deposit, enabling you to move into your new home quicker.
From the agent’s perspective, there’s less administration involved with deposit alternatives, as there’s no need to register and reconcile the deposit payment. For tenants, the process is also more streamlined, with all the paperwork signed digitally ahead of the move-in date.
This can be a huge advantage if the move-in date is just around the corner. However, if you have more time to prepare, a traditional deposit can be also be suitable, providing both the tenant and agent are proactive with the paperwork. Overall, deposit alternatives can offer a simpler sign-up process, making them an attractive option for many tenants.
Ultimately, when it comes to deposits, it's not about forcing one method over another - the choice is entirely up to you and what works best for your personal circumstances. For some, paying a traditional deposit along with their first month's rent isn't feasible, while others may prefer to part with a smaller sum during tough economic times.
We hope this blog has helped you better understand deposit alternative products and how they differ from traditional deposits. If you would like to rent using our deposit alternative, speak to your local letting agent to find out they offer flatfair or tell them to call us on 0207 078 7073 to find out more.