The head of flatfair, a London-based fintech that lets landlords offer “deposit-free” renting to tenants, is urging more people to sign up to nil deposit schemes as an alternative to a traditional deposit, in order to make renting more affordable, in light of rising rental values.
A recent reduction in rental housing supply has restricted choice for tenants, as demand continues to outstrip supply, leaving many people paying higher rents.
Rents are rising across the UK and this trend looks set to continue as rising demand from prospective tenants puts upward pressure on values.
Surveyors have reported a shortage of properties to let and that is driving up rental prices, with the number of properties listed by landlords for rent falling again last month - extending the decline since the trend was first recorded by RICS in 2016.
Rising demand for homes to rent and falling supply will see rents increase by potentially 2% - and up to 3% per annum by 2025 if this trend is maintained, according to RICS.
“Rising rents will impact renters’ ability to access the homes that they really want, especially as people will have to find even more to cover hefty upfront costs,” said Franz Doerr, founder and CEO at flatfair.
Instead of taking a deposit, flatfair’s service allows landlords and agents to ask tenants to pay a one-off fee - equal to the value of one week’s rent - which in turn offers residential landlords up to 12 weeks protection and a free debt recovery option for any additional claims.
Many letting agents have welcomed the opportunity to offer tenants an alternative to up-front deposits and believe the pay-as-you-leave approach brings several benefits to both tenants and landlords.
Landlords considering working with flatfair should be aware that the scheme is insured by an A-rated financial institution and works with government-authorised adjudicators.
Doerr added: “We are focused on making the rental market fairer and more transparent for everyone through our payment technology that strips away the need for onerous upfront rental costs, whilst offering unrivalled protection for landlords from any damages or rent arrears.
“Renting can be made fairer for everyone if we embrace existing tech-driven platforms that are transforming renting.”