Instead of paying a traditional deposit, which tends to be the equivalent of four to six weeks’ rent, under the deposit replacement warranty scheme tenants only pay an initial premium of between £100 and £150. This provides guaranteed payment against damage and non-payment of rent at the end of the tenancy.
Graham Kinnear, managing director at Landlord Assist, said the new scheme is the perfect answer to a catch 22 situation.
He said: “We have come across instances where tenants have been forced to borrow finance to simply pay for a second deposit whilst they wait for a refund from their previous landlord.
“Tenants love the fact that under the deposit replacement warranty they can move into new accommodation without the need to save up yet another deposit and landlords love the fact that it can speed up the tenancy process.”
Landlords benefit by having properties which appeal to a wider marker and as would-be tenants don’t require a deposit. Being able to advertise the property as ‘No Deposit Required’ can help landlords to attract tenants quickly and reduce the void period at the end of tenancy agreements.
Kinnear said the scheme has already attracted enormous interest due to the fact that under the government’s Tenancy Deposit Schemes landlords can only apply to return the tenant’s deposit at the end of the tenancy agreement when they have vacated the property.
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 deposit replacement warranty scheme is currently only available to landlords and letting agents who sign up to Landlord Assist’s Tenant Referencing service.