More transparency needed on deposit alternative schemes

There has been much debate in recent days about deposit-free renting and whether letting agents have been mis-selling deposit alternative products, resulting in ‘hidden costs’ later being charged to tenants, but the real issue is a lack of transparency, according to Hamilton Fraser. 

A BBC News online article this week criticised nil deposit schemes as an alternative to a traditional deposit because it claimed a number of companies and letting agents are offering deposit-free options without making it clear they could cost renters more over time. 

But Hamilton Fraser, parent company of mydeposits and recently launched new deposit replacement scheme, Ome, believes the issue is not the option of deposit replacement schemes themselves, but with the more deep-rooted problem of transparency across the UK rental sector.  

Eddie Hooker, group CEO of Hamilton Fraser, commented: “As a supplier in the industry of both traditional tenancy deposit protection through mydeposits and one of the new, deposit replacement scheme alternatives, we consider it important to ensure that tenants have full choice as to whether to find a traditional upfront deposit or to manage their cash flow by opting for a deposit replacement product. 

“However, tenants must always be fully aware of the terms and conditions of whatever choice they make. With a traditional deposit, this means reading the tenancy agreement to understand when a landlord can deduct monies from their deposit, and for a deposit replacement they understand that they will always be responsible for deductions at the end of the tenancy even though they will have paid a fee for the product.” 

Hooker added: “My issue has never been with the replacement products themselves, rather how they are sold and by whom. I’m not sure that all products put the tenant at the heart of the decision-making process even though the law states that tenants must be offered a choice of both a traditional deposit and a replacement product”.  

“But I believe the deposit replacement space has a real opportunity to not only push the changing face of the rental sector towards a tenant first mentality but to do so with a proper set of industry guidelines that hold everyone accountable to the same standards.”

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