It’s every tenant’s real-life, recurring nightmare: finding the perfect rental property, only to discover the prerequisite to moving is a huge deposit worth 6 weeks’ rent. The added hindrance of having an existing deposit locked up until their current home is vacated makes for an exhausting cycle, where tenants never get back the vast amounts of money they put in.
It was great news, when in 2012 the Deposit Protection Service (DPS) established itself to prohibit rogue landlords plundering their tenants’ deposits, but a huge affordability problem still remains. With more than 21% of British households privately rented – growing to 24% by 2021 – and with the average deposit now standing at £1,254 (£2,128 in London), financial freedom – fundamental in the residential lettings sector – is all but grinding to a halt.
The problem isn’t just for tenants either. The knock-on effect of their immobility in the market means that landlords and agents can’t let properties at the pace they need to, resulting in damaging void periods. Properties go un-let, unravelling landlords’ businesses, and creating a rift in their relationship with agents.
Enter deposit-free renting
It’s been a long time coming, but thankfully, the solution to landlords’ and tenants’ woes is swiftly becoming a reality, as deposit alternatives like flatfair enter the market. In removing the absolute necessity for tenancy deposits, these companies are solving not just the affordability problem, but one of security, transparency and trust as well.
In the case of flatfair, tenants pay a one-off membership fee equal to the value of 1 week’s rent, split evenly between the household. This substitutes an expensive deposit, significantly reducing tenants’ upfront cost when moving home. Any damages or rent arrears accumulated during their stay are charged by the landlord or agent at the very end of the tenancy. This all takes place through flatfair’s online portal, designed to turn tasks that had previously taken hours into a matter of minutes. Tenants can view any claims brought against them, then pay, negotiate with their own preferred amount or dispute those claims via government-authorised dispute resolution providers. The ease and transparency of this process helps both parties come to a fairer agreement, with evidence required to back a lawful claim. flatfair also provides assurance through the disputes process by penalising any bogus claims that are raised.
For landlords, the added bonus comes in the form of flatfair’s recovery and protection service. While flatfair collects unpaid sums from tenants, the landlord is able to sell up to 12 weeks’ worth of claims, keeping them in-pocket during long periods of irresolution, or indeed on the rare occasions that tenants refuse to pay, or disappear entirely.
This March, flatfair launched partnerships with haart, Darlows, Haybrook, Felicity J Lord, Butters John Bee, Brian Holt (four arms of the SpicerHaart brand) among many others, making its deposit-free renting service widely available across the UK.
The future of deposits
It’s clear from the number of tenancy deposit replacements that have emerged over the last few years that there’s an upward trend towards deposit-free renting. With the government proposing a 5-week cap on the value of deposits, and with more landlords and agents realising the extent to which prospective tenants are prohibited from moving into their properties, it’s a sensible development.
(Post originally featured on movingsoon.co.uk)
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