Are you still asking your tenants for a deposit?
Here at Residentsline, we’ve created an insurance policy which means you never need to ask for a deposit again, but still have the same level of protection.
Across the insurance industry, it now seems that the deposit system is becoming a thing of the past. If you consider the statistics, this is hardly surprising. Before June, the standard cost of a tenancy deposit hovered between four to eight weeks’ worth of rent: this was around £1,041 for England and Wales, whilst the London average was at an eye-watering £1,750. It was somewhat expected then, that the government stepped up to combat these mammoth costs.
At the beginning of June, England welcomed the introduction of the Tenant Fees Act. With the Bill being passed in May 2018, this was a long-awaited legislative change eagerly awaited by tenants across the country. As well as banning lettings agents’ fees, the Act has ensured that the cost of a deposit must be capped at 5 or 6 weeks’ worth of rent (depending on the annual rent of the property). However, whilst the Act has undoubtedly lessened costs for many, there are a substantial number of tenants still feeling the pinch when trying to find the money to move.
What is a Deposit Replacement Scheme?
Whilst it is widely accepted that landlords require a deposit, many may not be aware that they are not actually a legal requirement. This has allowed for developments within the insurance industry to create more suitable, reliable and easier solutions for both landlord and tenant than the standard deposit system has ever been able to offer.
Some deposit replacement firms request the tenant pay a nonreturnable upfront fee at the beginning of their tenancy. This sum is usually the equivalent of one weeks’ worth of rent – which, when compared to the standard six weeks’ worth, means tenants no longer need to wait until they have amassed a small fortune before being free to move.
The only downside to this scheme is the fact that the one-week sum is not refundable, regardless of the property condition. However, the fact remains that many prospective tenants would rather pay a nonreturnable (yet vastly reduced) sum as opposed to a six-week fortune (which is not guaranteed to be returned to them anyway).
Along a similar vein, some deposit replacement firms have a scheme in place that requires a small sum to be paid alongside the tenant’s rent. This effectively removes the need for an upfront cost altogether: a massive benefit for those struggling to save. The sum is spread over the period of tenancy, yet still provides the landlord with the same cover as a standard deposit.
Our Deposit & Rent Insurance
Here at Residentsline, we have developed our own deposit replacement scheme which does not require one weeks’ worth of rent or monthly payments. We have created an annual insurance product called Deposit & Rent. Underwritten by Legal Protection Group Ltd., this modern policy not only provides all the benefits of a deposit replacement scheme but has been tailored to include Rent Guarantee AND Landlord Emergency Assistance. For an impressively competitive price, tenants could go from finding themselves struggling to put together a six weeks’ worth of rent to having a bespoke, comprehensive policy for just a fraction of the price.
Rent Guarantee is a practical addition to our deposit replacement policy. It provides cover for landlords towards any unpaid rent. So, should a landlord find themselves in a position where rent is overdue for at least one month, we will shoulder the cost to ensure the landlord is paid the full sum. The policy will also pay the landlord the value of one months’ half-rent for a subsequent three months if the property is damaged and cannot be immediately relet.
Towards the end of tenancy, it goes without saying that all parties involved would prefer tenancy cessation to go smoothly. However, there are many occasions where this simply is not the case; conflict can arise over issues such as property damage, rent payments and even repossession of the property. Our Deposit & Rent policy is tailored to cover you against these conflicts, no matter how challenging the situation may be. Should there be difficulty when repossessing the property; we will provide the landlord with cover for up to £175 per day towards the cost of their alternative accommodation, plus £15 a day towards the cost of storing their possessions. We will also make funds available towards legal expenses cover for rent recovery, property damage, alleged breaches of contract, eviction, and legal nuisance and trespass disputes. And, should these disputes reach the court, our policy will even cover the value of lost salaries for the time taken off work.
Landlord Emergency Assistance
And, if Rent Guarantee wasn’t enough, our inclusion of Landlord Emergency Assistance makes this policy one of the most comprehensive policies on the market. Whilst property disputes are certainly difficult, accidents and emergencies are something that neither the tenants nor the landlord can control. Luckily, Deposit & Rent covers against accidents and emergencies, giving protection at a time it is needed most. Any failures to the property’s heating, electric, plumbing or gas supplies are insured, on top of cover for pest infestations and damage to windows, doors or locks. Should you break the keys to the property or lock them inside, we will appoint an authorised repairer to carry out emergency repairs and cover any damage caused in gaining access to the property, as well as paying the repairer to make the property safe and secure. The policy also covers any damage to the roof caused by adverse weather conditions or fallen trees, as well as the cost of one night’s accommodation should the property be uninhabitable following an emergency.
With such comprehensive cover and protection against an impressive range of incidents, it is clear to see how our Deposit & Rent policy is holding its own within the insurance market. It is a modern insurance product which has been carefully tailored to suit the financial needs of both landlords and tenants, as well covering both parties against as much as possible. And for such far-reaching cover, it still comes with the most competitive prices available. With the standard deposit system being in such dire need of re-thinking, it is refreshing to see that there are new schemes in the industry that are more than up to the challenge.