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Are letting agents discrediting the zero deposit insurance concept?

Many landlords have welcomed the zero deposit insurance concept - but is this being damaged by the pressure-selling techniques of some letting agents?

The Observer newspaper has investigated the way agents apply these schemes and claims that in some cases agencies are flouting the tenant fees ban.

The newspaper says it has “uncovered evidence of pressure-selling tactics by some agencies in England, including cases where people were told they were required to sign up as a condition of securing a tenancy.”


One case study cited in the Observer article involved a couple - Travis and Hannah - who claimed they were “forced” to enrol in a zero deposit scheme after applying to rent a house in Cornwall. 

They are reported to have paid a £225 non-refundable joining fee for such a scheme, having originally asked to instead pay a traditional larger deposit which would then have gone into an approved deposit scheme. 

An email from an unnamed agent, sent to the applicants, said: “If that is something that will be a deal breaker for you, the landlord would more than likely look to the next applicant who would be willing to go down the zero deposit route.”

The Observer’s article quotes James Munro, head of the National Trading Standards Estate and Letting Agent Team, as saying: “Often it’s the agent who is the one in the middle really pushing these schemes and a lot of the time it’s driven by referrals.” 

And a spokesperson for The Property Ombudsman says that, while TPO cannot handle complaints directly about zero deposit schemes: “Where a tenant is forced to enter into a Xero deposit arrangement, this may be a breach of the Tenant Fees Act 2019.”

The newspaper article does not name any specific zero deposit scheme nor does it quote any response from a provider.

Landlord Today has asked two prominent zero deposit companies for their views on the article.

We have received a response from one - flatfair - which says: “Allegations of pressure selling are concerning and we would condemn any such instances. flatfair’s business model is guided by the principle of maximising choice for consumers, and ensuring a fair and transparent process for everyone. 

“We have sold several tens of thousands of No Deposit products to happy customers and we are only aware of a few cases where the product was not offered as a choice.”

Flatfair continues: “We are clear with our partners that flatfair’s products need to be offered alongside traditional deposit schemes. Whether landlords indicating a preference is a breach of the rules on tenant fees is a separate legal question but it is certainly against our business practices and ethics - our agents are trained to ensure that flatfair is not a condition of the tenancy and should not influence a tenants ability to rent a property, quite the opposite.

“We also have a number of robust processes in place to ensure that our No Deposit product is always offered as a choice for tenants. Whilst we are unable to mandate how agents market or promote our products, we insist that our deposit alternative is offered as a choice, in line with existing regulations, and provide regular training and marketing materials to support this. 

“If we are made aware of any tenants who indicate that they were not offered a choice, we work with our partners to ensure the tenant can switch to a cash deposit, receiving a full refund once a traditional deposit is in place.”

You can see The Observer piece here.

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    Certainly my experience Leaders in Milton Keynes tell tenants that the LL wants zero deposit tenants then charges them every month for the "insurance" policy that 1 does not build up to a deposit and 2 if the LL clams against then they still have to pay. A scam to make the agent lots of money. This case is now with the TPO for this and many other issues! LL don't touch Leaders with a a barge pole!

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    Any agent acting in their landlord's interests shouldn't be touching these policies with a bargepole anyway. They are cumbersome, ill-conceived and cost landlords' time and money.
    They provide the tenant with the ability to shirk their contractual responsibilities and leave the agent/landlord a mess to sort out. Nothing focuses a tenant's mind more than losing part of their cash deposit should they not leave a property clean and damage free when vacating.

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    The Deposits Schemes were Discredited the day they were introduced in 2007, when the Scheme was brought in base on a pack of lies by Shelter when they alleged up to 45% of Deposits were withheld by landlords it later turned out less than 2% went to Deposit Resolution, so it’s hardly news and why would it’s take the Observer 15 years to write about this injustice while we have suffered greatly at the hand of Shelter’s untrustworthy Actions. Did I read this correctly or was it a historic Article.

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    My view is that if a prospective tenant can't afford to save up the deposit, there is a risk that they can't afford the rent.

    If they don't want to risk their own money, why should I risk my property?

    Either way, no deposit= no tenancy.

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    My Lettings Agent offers a No Deposit Option and advised that it is better for the landlord. It appears that the tenant has to pay a monthly charge for this Option and so too does the landlord.

    Then my last tenants decided to leave and I have been left with hundreds of pounds of dilapidations. No problem, I thought, my Agent indemnifies me against any losses. NOPE! The Agent charged me for the full cost of making good and the ex-tenants wouldn't respond to Agent's correspondence.

    It's been over 3 months since they left and I have not seen one penny. The Agents say that the case must now go to arbitration and I have to abide by the result. Goodness only knows when that arbitration will take place.

    I have decided that in future I will only accept tenants whose deposit goes into the TDS (or similar) because this is utter BS and I having been paying the Agent to look after my interests and they clearly haven't.


    Like any form of insurance there's always that gamble of whether they will pay up and when, my agent doesn't offer that option and if they did I wouldn't take it .
    If you paid your agent directly for the cover then your contract is with them, sue them, money claim on line, and move your properties to another agent


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