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Scrap rental deposits, says agent

The government’s intention to reform rental deposits has been broadly welcomed, but one letting agent believes that they should be abolished altogether.

The chancellor George Osborne said last week that the government is looking at what it can do to make sure that people who rent have “proper consumer protection, including protection from landlords who withhold deposits unreasonably”.

However, Ajay Jagota, CEO and founder of Keep It Simple Group (KIS), thinks that a more effective way to improve the private rented sector would be for monetary deposits to be scrapped.  


His firm KIS were the first letting agents to abolish monetary deposits, replacing them with a one-of-a-kind insurance policy. He is also founder of dLighted, an insurance backed deposit-free renting solution offering up to £7,500 of cover for agents.

He said: “The simplest and most effective solution to guarantee a better deal for renters is to abolish deposits and move the private rented sector towards the  insurance-backed model used in almost every other industry on the planet.  

 “Study after study concludes that they are the biggest barrier to entering and moving house in the private rented sector, with our research showing the average renter needs to stump up more than £1,000 to get the keys to a new home before they’ve even paid the first month’s rent.

“But time and time again policymakers ignore this in favour of the same old cul-de-sacs and clichés like banning of letting agent fees or rent controls.

“Not only would abolishing deposits mean the £3.2bn being release into the wider economy, £2bn of which is literally just gathering dust and interest right now, it would make it easier for renters to move house, easier for them to keep a house and easier for them to save for a property of their own.

“A survey recently showed that 78% of renters want greater protections from their landlords – this is the simplest and most effective way of giving them that piece of mind.”

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    This is an ad disguised as an article.

    Landlord Today? Really?


    an attempt to release £3.2bill?

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    You cannot buy or rent anything without paying some kind of deposit, and renting a house is no different to anything else. I believe that deposits are necessary - the tenant has got to realise that they are going to lose something if they abuse/break things. Why should the Landlord always stomach the cost.? Once a tenant has disappeared over the horizon there is little chance of getting any money out of them - and again it's at the landlords expense. To safeguard the tenant, and the landlord, the law should be changed so that all deposits are compulsorily PAID IN to a scheme such as TDS and MyDeposits meaning that no deposits are actually held by landlords or letting agents. Disputes would be handled by the scheme concerned, just like they are now. Deposits would be returned directly to the tenant after submission of the correct paperwork at the end of the tenancy. The interest generated by the money in the scheme would ensure that fees to landlords would be kept to a minimum/free.

  • Mike Walker

    Not a new idea by far either. The deposit system works to a degree, but has many flaws, especially from a commercial perspective. However, the fear among many landlords is that is tenants think they are insured, they will be more careless in keeping the property to spec.

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    Hello all good to read your comments debating the article.

    I will endeavour to answer some of the questions raised and attempt to address the general misconceptions surrounding the propostition. - without trying to sound like an advert!

    Firstly KIS is a letting agency that has been operating in he North East utilising a no deposit approach to all our managed properties for approx 7 years. In that time we have been working with the insurance industry to develop a product that negates the need for a tenant to provide a monatory Deposit whilst still protecting both ourselves and our landlords.

    Figures from 2015 show there is £3.2Bill in deposit schemes, with £1.1bill in custodial and £2.2bill in the insurance schemes. In the case of the custodial scheme the interest earned from the "tenants deposits" is used to administer the schemes offering a free to use service, however under the insurance scheme the "tenants deposits" interest is used by the holder of that depsoit which for some operators is a six figure sum.

    My personal view is the current process of taking monetary deposits is now outdated and in need of reform. If we as consumers hire a vehicle we are not required to pay a substantial amount of money to mitigate risk we as a society in many sectors (apart from the PRS) accept the use of an insurance policy to mitigate against risk. Does the fact that a person has an insurance policy when hiring a vehicle mean that they become a reckless driver?

    In the current schemes the disputes ratio is 3% so 97% of these deposits are simply handed back, the metrics on the Dlighted (deposit replacement insurance) product shows the claim ratio at less than 3%, evidence that taking a monetary deposit has no bearing on the performance of the tenancy. The use of the insurance means any decision made is not subjective it is an objective view e.g. there is damage to the property and there is evidence on the inventories to substantiate a claim. No decision to proportion blame is necessary as is the case with monetary deposits. The claims history is captured to de-risk the market for all stakeholders unlike the current schemes.
    The policy not only protects against damage but also rent guarantee and legal expenses offering greater protection than the current taking of a deposit.

    A thought to leave you all with, tenants are consumers, there is an affordability issue in the PRS, we as a sector can choose to ignore it or embrace positive change.

    Regards Ajay Jagota


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    * www.Dlighted.co.uk

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    A deposit is a way for the tenant having a stake in the propert they are going to live in. And from the Lanlords point of view security, knowing he has at least some cash to pay for damage, missed rental payments and or legal fees...
    a Average deposit of £1000 is peanuts to have the keys of £200k plus flat/house...

    Let's keep the cash deposit, as landlords have invested real money into the property so should the tenant know what it feels like to have there cash tied up also, besides If it's in the deposit protection scheme (DPS) or some other, niether Lanlords or tenant decides who gets what, as its up to the scheme judicator or judge if you had to go through the courts....commitment and a stake from the tenant in monetary terms is all we have to show they are willing,able and worthy of having the keys....keep the cash deposit...

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    you may want to keep the cash deposits and think nothing of £3.5billion held in these schemes is still a good idea.... thankfully many disagree.


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