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  • Deposit Protection

    Smart landlords are using deposit replacement

    Am I right in thinking that they pay 1 weeks rent for the guarantee but they never get that back and that they also have to pay an admin fee of £26 per year?

    I somewhat like the idea, but I feel like tenants are getting the short end of the stick.  The tenants who might think it is a great idea are the ones who are more likely to have problems with money in the first place imo.

    If this becomes popular though I may have to adopt it, just to stay competitive, as things stand at the moment my voids are very low so I will continue with normal deposits.

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    That's right - and it's not for everyone. But you'll see from our trustpilot reviews that many tenants love the idea of paying a one off fee and holing onto their cash.

    The choice is key. e.g. Mobile phone contracts - I can buy an iphone XR for £500 and get a cheap monthly contract for £10. Or I can get a monthly contract of around £50 which costs me nearly £500 more over the two years. Over 50% of mobile phone users choose the more expensive option over the long term because it's more accessible in the short term.

    With Zero Deposit, landlords get tenants who are moving into their property without having to go into debt or serious cash flow issues - so second and third months rent payments are less likely to be an issue.



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    Hi Ben - it’s an interesting concept and I’m sure as you say tenants do love the idea of it from there side why wouldn’t they ?

    What would be interesting is the metric of rent defaults for zero deposit vs regular deposit that may go some way to reassuring landlords concerns of their lack of skin in the game

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    It's too early to provide any significant stats in this area but early signs, having been trading now for 14months, are that the claims rates are very similar and we're not seeing more tenants default on rental payments than with cash deposits. We work closely with the TDS and they are seeing a similar profile of claims (albeit on a relatively low number so far) as they do with cash deposits. Whats has been most encouraging for us so far, is that with the majority of our disputes, we've been able to resolve them without having to go to dispute resolution (TDS), thus speeding up the process of getting payment to the landlord.

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    Perhaps, though id suggests Smart Landlords would take cash as a deposit. Rather than rely on an insurance policy.

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    The above post is not financial advice, its often me rambling - passing time on a coffee break.
    If you are looking for the Best BTL Mortgage? Call the Specialist Team at Bespoke Finance.


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