Published: 22/05/2020
From now on both Landlords and Tenants will be able to benefit from our new deposit replacement scheme.At no extra cost to them, Landlords can now be covered by a higher deposit amount. Any Tenants that go for the Deposit Replacement option (they always have the choice of a paying a standard deposit), will allow the Landlord to be covered for the equivalent of 6 weeks rent, instead of the standard 5 weeks rent cap, which was brought in as part of the Tenant Fee Ban. Therefore, this option gives the Landlord increased security over a traditional deposit.
The Deposit Replacement option follows the same adjudication process at the end of the tenancy as traditional Deposit Schemes. On average the policy pays out in 30 days where there is a dispute over how the deposit should be split, which in most cases is quicker than adjudication with the tenancy deposit schemes. Once a judgement is made, the scheme pays out within 48 hours.
Tenants are able to move into a property quicker, without having to find a deposit up front which greatly helps with cash and provides more options for moving. The cost of the standard cover policy is just 30% of 1 month’s rent, payable by the Tenant. This is non refundable since it is a policy fee rather than a deposit.
Where the Landlord has agreed for the deposit replacement scheme to be offered, Tenants will always be given the choice on whether to take the deposit replacement scheme, or whether to pay a traditional deposit, equal to 5 weeks rent.
This example shows the 2 different financial scenarios.
1. Traditional deposit
- Rent: £1000pcm
- Deposit £1250
2. Deposit replacement scheme
- Rent: £1000
- Deposit replacement cover: £300
If you are a Landlord please click here for more information.
If you are a Tenant please click here for more information.
As you can see, it's a win-win!