A new insurance product has been launched which is designed to eliminate the need for a tenancy deposit.
Instead of paying a traditional deposit, which tends to be the equivalent of four to six weeks’ rent, under the warranty scheme tenants only pay an initial premium of between £100 and £150 which provides guaranteed payment against damage and non-payment of rent at the end of the tenancy.
The product has been launched by Landlord Assist, which says that for tenants, the absence of a deposit means they have to find far less money up front and allows them to move into their new property much quicker.
It also means they don’t have to chase up the deposit at the end of the tenancy.
It says that landlords should also benefit from the fact that their properties appeal to a wider market.
Stephen Parry, commercial director at Landlord Assist, said: “We think it’s a great alternative to the government approved deposit schemes, under which it can take over two months for disputed claims to be resolved.
“With the deposit replacement scheme, all claims are guaranteed to be settled within seven days so that landlords can carry out any necessary repairs almost immediately.”
The scheme is currently only available to landlords and letting agents who sign up to Landlord Assist’s tenant referencing service.
www.landlordassist.co.uk
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Comments
A great idea?
a. It is as old as the hills and various other identical
schemes have been around for a few years.
b. It also means tenants pay money they do not get
back. At least if they have a deposit and are good
tenants it does not cost them anything.
c. It means the tenant has to pay whatever Landlord
Assist's referencing fees are.
d. It also means the Landlord is stuck with the quality of
that referencing. Are they going to be that thorough
and spend as much of that fee on a captive
audience?
e. I assume Landlord Assist have confirmed they will
keep the full references for 6 years and that at any
time, on demand, if needed in pursuit of a LERG
policy claim with another insurer, that Landlord
Assist will make them available?
and so on and so on with the weaknesses of such schemes.
For example if the tenant cannot scrape together a deposit how are they going to pay the rent the first month they run into financial difficulties through lack of overtime, short time working, loss of bonus etc etc?
I think that this is a great idea, however will it mean that the landlords will have less power and will also now have to chase an insurance company for any damages?
Let's hope it works out without any pit-falls!