Rental properties remain a booming business and as a landlord protecting yourself again unexpected costs are important.
Recently there have been a number of much-needed changes within the insurance industry. 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.
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 a tenancy – this makes it more affordable for tenants to move, but not at the expense of their landlord’s protection.
The common factor across these new deposit-free schemes is the fact that neither the tenant nor the landlord loses out. The tenant is provided with a reduced fee and a payment method to suit their financial situation, thus removing the barriers that many faces in trying to rent. For the landlord, they are provided with the same financial cover as a standard deposit. A major factor at the forefront of these schemes is that the insurance company act as the middle man between landlord and tenant – if any damage occurs, the insurer will cover the costs for the landlord. As agreed, the tenant will be held liable, and the insurer will recover the value from the tenant themselves (in the same way a landlord would deduct money from their deposit).
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