In the wake of ever-present modernisation, it now seems that the standard deposit system is becoming a thing of the past. And, unlike video stores and hardcopy books, it isn’t something many people will look back on fondly.
If you consider the statistics, this is hardly surprising – the average cost of a tenancy deposit is generally equivalent to six weeks’ rent and, according to ARLA Propertymark, rent prices are only on the rise. So, as reported by the Tenancy Deposit Scheme, this lands the average cost of a deposit at £1,041 for England and Wales, whilst the London average has climbed to an eye-watering £1,750.
This has not gone unnoticed. To combat these mammoth costs, the government have put a cap on tenancy deposit at being equivalent to maximum of six weeks’ rent, as well as banning letting agents’ fees. When coupled with the fact that residents normally need to provide a deposit before the return of their previous deposit, it is easy to see why tenants are welcoming the chance to shun them altogether.
The purpose of a deposit replacement scheme is basically to replace the standard deposit payment with an insurance policy. This policy provides landlords with the same protection as a deposit, but effectively removes the requirement of an expensive lump sum prior to tenancy – this makes it more affordable for tenants to move, but not at the expense of their landlord’s protection. Instead, deposit replacement firms ask the tenant for either an unreturnable upfront fee (usually the equivalent of one weeks’ rent), or for an additional small sum to be paid alongside their rent every month. The policy holds the tenant liable for any damage at the end of their tenancy, and will recover these costs from the tenant, whilst guaranteeing to cover damages for the landlord.
There are many insurance products available on the market today, all of which include the many benefits of a deposit replacement scheme. Residentsline, an experienced property insurance intermediary, have recently developed a deposit replacement scheme that stands out as one of the most cost-effective schemes on the market. For a quotation call our team on 0800 281235.
