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Can a tenant who can’t afford the deposit be trusted to pay the rent?

Deposit-free renting is growing increasingly popular, with more providers than ever before now providing tenants with a range of nil deposit schemes, but is a tenant who cannot afford to find the deposit an inspiring applicant for a landlord’s property?

A recent YouGov survey found that 43% of renters would prefer to see tenant deposits scrapped and replaced with deposit protection insurance that pays for any damages to the property at the end of a tenancy, with tenants typically required to pay into the scheme through either a one-off payment, such as a week’s rent, or a monthly fee.

Tom Crosthwaite, head of sales at RentMyHome.co.uk, commented: “Nil deposit schemes are a helpful alternative to a traditional deposit as they provide protection for landlords at the same time as helping tenants who don’t have big reserves in place to pay a month's rent and six week’s deposit up front.


“This is often a hindrance to tenants moving and so a nil deposit scheme means landlords don’t miss out on good tenants who just don’t have large savings in place.”

Several organisations are calling on the government to get behind an insurance-based model as an alternative to a rental deposit. But not everybody is convinced of the merits of the insurance-based alternative to traditional tenant deposits.

Kris Kandiah, a letting negotiator at Benjamin Stevens, said: “I feel that a landlord would be less inclined to rent their property to someone who cannot afford to pay a security deposit and furthermore I can see that a landlord would be put off from a deposit replacement product. What would happen if the tenant wants to use their last month rent from the deposit and there are damages at the property when they leave?”

Kandiah believes that deposit replacement products will end working in a similar fashion to how councils used to use deposit bonds.

He added: “They [councils] now don’t use this [deposit bonds] as much as landlords weren’t accepting their tenants and they now pay landlords incentives as they know the landlords want the money and not an insurance based deposit or deposit bond.

“It is a product that is aimed at the rental sector where applicants can’t afford a deposit but the real question to ask is if they are unable to afford a deposit, can they be trusted to afford the rent and can it be paid in time.”

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Poll: Can a tenant who can’t afford the deposit be trusted to pay the rent?


  • James B

    Tried nil deposit scheme and doesn’t work.. creates various problems, we would not rent to tenants without a deposit it’s essential. And yes I agree if they haven’t got a deposit behind them the chances of running into rent problems is obviously higher ...

  • icon

    In my experience the answer is no. We always insist that the first months rent and the bond is paid upfront as this is a good indicator of whether someone has the means to find the money if necessary. We have in the past even had tenants pay the application fee in bits and bobs. The inevitable happened so we won't be doing that again.

  • icon

    I had a guy once that wanted to pay the deposit in installments, well that wasn't going to work was it, he couldn't understand it when I said no. I've not tried these nil deposit schemes and I'm not about to, sounds like a scam to me.

  • Andrew Hill

    Yes. £600pcm a month is far easier to get hold of than a grand for a deposit within 7 days before they forfeit their holding fee, tenant fees, etc. Which often cost more than a month's rent anyway!

    Deposit free renting is a life saver for many of our tenants.

    I've also found tenants will not pay the last month's rent on the basis "our deposit will cover it", with deposit free renting, tenants don't seem to have this attitude; I think they pay the fee for deposit replacement and then just forget about it.

  • Daniela Provvedi

    My tenant didn't have 6 weeks deposit and asked if he could pay it over 3 months. After he & his wife passed the credit check, I decided to give them a chance. I was lucky, I suppose? 7 years later, they're still my tenants and haven't missed a month's rent.

  • icon

    Golden rule, pay the rent pay the equivalent of a deposit or no TA, simple.


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