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Government urged to reform the rental deposit system

When renting a property out, landlords recognise that it is important to take a deposit from the tenant and place it in a government-backed tenancy deposit scheme as protection to ensure that any potential damage or unpaid rent at the end of the tenancy is covered. 

However, raising enough money for a tenancy deposit can be a real challenge for some renters, which partly explains why there is growing appetite for deposit-free renting. 

Nil deposit schemes, such as insurance-based alternatives, are viewed by some people as a weclome alternative to a traditional deposit as they provide protection for landlords at the same time as helping tenants who do not have big reserves in place to pay a month’s rent and a few weeks deposit up front. 


Recent research from Your Move suggests that renters are increasingly interested in alternatives to traditional upfront deposits.


Renters in England and Wales shell out £1,110 on average for a deposit, according to the Tenancy Deposit Scheme, and often have to pay twice over due to delays getting their previous deposit back.

Research by consumer group Which? found that 43% of tenants that were planning to move to a new rental property had to use a credit card, loan, overdraft, or borrow cash from friends and family to pay for a deposit on their new home. 

The study also found that 16% of tenants who had moved out of a rental property in the past two years had to wait more than four weeks to get their deposit back, leaving a third to pay a new deposit before they had received their previous one back.

Deposit-free renting provider Flatfair is among a host of companies calling on the government to reform the rental deposit system.

Franz Doerr, co-founder and CEO of flatfair, said: “The growing demand for deposit replacement services in the UK shows that a more equitable solution that affords landlords enhanced protection, while saving tenants money, is possible.  

“Instead of diverting resources into solutions that perpetuate the existing tenancy deposit model, government should promote the adoption of alternative tenancy deposit initiatives by incentivizing landlords who opt for alternative deposit solutions introducing clearing platforms for financial transactions.”

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Poll: Is the deposit-free rental model a good idea?


  •  G romit

    Tenants need to have some skin in the game. Period

  • icon

    If a tenant cannot afford a deposit then it follows that they cannot afford the rent either.

  • Kristjan Byfield

    Personally I don't feel we need the government to mandate any one system, we have a marketplace becoming increasingly diverse- some do cash deposits, some do alternative products and some have forgone deposits all together in return for a slightly higher rent. The licensed cash schemes are looking at a 'passporting' solution where the majority of a deposit can be transferred to another property whilst deductions are finalised also reducing outlay. A marketplace with options where the landlord & tenant can choose what solution they want is the best for all concerned.

  • James B

    This is nothing more than advert for flatfair. If tenants can’t afford a deposit it’s not a great sign they are going to pay their rent if they don’t have £1k to their name , or £500 average in our area

    • 30 October 2019 11:37 AM

    Of course the dear little snowflakes WON'T have any savings for a deposit.
    They are entitled to their Costalot daily coffee, their PCP car contract and 3 holidays a year.
    No deposit money for boring deposits: much more fun not having savings and spending everything on Me;me, me.
    They have wants you know that AREN'T to be denied!!

    James B

    Pretty well summed up paul

  • icon
    • N P
    • 30 October 2019 15:07 PM

    While in theory I am happy to offer this (I get 6 weeks cover instead of the usual 1 month I ask for), in reality I think it could backfire on the landlord. If a tenant doesn't have to pay anywhere near a full deposit (ZeroDeposit charge the tenant an equivalent of one weeks rent), there is little incentive for them to look after the property/pay all the rent as they have very little to lose. Yes firms like ZeroDeposit say they will pursue the tenant for money owed to them (after they have paid out to me) but I'm not sure that's a convincing disincentive for a tenant to misbehave.

    James B

    Yes and throw in the mix all the ‘get outs’ the policies have and the significant admin to make a claim

  • icon

    No deposit means no chance of renting any of my properties. Tenants need to get their priorities right and show landlords they can be financially responsible. Sacrificing 1 week's rent instead of saving up 4 to 6 weeks' rent as a refundable deposit is a mug's game and shows poor financial acumen.

  • icon

    Having tried to make an insurance claim for flood damage to one of our properties I would not want to opt for an insurance policy instead of a deposit. I feel that Franz Doerr has a vested interest in deoosit insurance.


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