In recent years, government initiatives regarding the property market have been focused on giving more power and stability to tenants. Since addressing the protection of tenant deposits in 2007 with the implementation of the 2004 Housing Act, the law has leaned more towards alleviating the pressure put on tenants regarding initial payments and providing financial protection during their tenancy. The most recent legislative action, as discussed, will be the implementation of the Tenant Fees Act 2019.
This article, however, will look at the growing popularity of deposit replacement schemes; discussing why they were introduced, what they do and how they affect not only tenants, but landlords as well.
Deposit replacement schemes
Deposit replacement schemes have made a strong impact on the property market in the past couple of years. They were introduced as a way of combatting the extensive costs of deposits as this has become a real struggle for prospective tenants, particularly in London. A deposit replacement scheme, in basic terms, replaces a deposit with an insurance policy, with a deposit replacement firm acting as the middle man between landlord and tenant.
Usually, deposit replacement schemes require the tenant to pay either:
- a non-refundable fee of (normally) one weeks’ worth of rent; or,
- a small fee alongside their rent every month
These schemes provide landlords with the same protection as a deposit, but effectively remove the requirement of an expensive lump sum in upfront fees, making it more affordable for tenants to move but not at the expense of their landlord’s protection. These schemes hold the tenant responsible for any damages during their tenancy and will recover this cost for the landlord.
Deposit and Rent
We have developed a deposit scheme which requires neither one weeks’ worth of rent nor a monthly fee. Instead, we have designed a bespoke policy: Tenant Deposit Legal Protection. This insurance policy provides all the same benefits of a deposit replacement scheme but for a more competitive price as well as including added extras such as Rent Guarantee and Landlord Emergency Assistance.
Rent Guarantee provides cover for landlords against any unpaid rent. Should a landlord find themselves in a position where rent is overdue for at least one month, Residentsline will shoulder the cost to ensure the landlord is paid the full sum. Their 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 re-let.
As well as this, Deposit and Rent protects against any difficulty the landlord may face when repossessing the property. This policy will provide cover for up to £175 per day towards the cost of alternative accommodation plus £15 a day towards the cost of storing possessions. They will also provide legal expenses cover for rent recovery, property damage, alleged breaches of contract, eviction, and legal nuisance and trespass disputes. Should these disputes reach the court, Residentsline will even cover the value of lost salaries for the time taken off work.
Landlord Emergency Assistance ensures that the property is protected against any unforeseen accidents or emergencies, providing cover for any failures to the property’s heating, electric, plumbing or gas supplies, as well as for pest infestations and damage to windows, doors or locks. Should you break the keys to the property or lock them inside, Residentsline 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.
In terms of legal expenses cover, Deposit and Rent also provides the following:
- Up to £50,000 to negotiate settlement of any dilapidations claims
- Up to £50,000 to pursue your legal right if your tenant has absconded before the dilapidations inventory was completed
How does this benefit you?
The common factor across Residentsline’s Deposit and Rent scheme is that is beneficial to all involved. For tenants, the policy takes away the stress of paying a small fortune for a deposit before moving in, therefore removing the financial barriers many face when being able to afford the upfront costs of a property. For landlords, this policy gives all the cover of a standard deposit as well as providing cover for unpaid rent, conflict over payment, any damages to the property and legal expenses incurred.
With a claims line available 24/7, Deposit and Rent is one of the most comprehensive policies in the insurance market. At an incredibly competitive price and with gold standard customer service, you can trust that you’re always getting the best product at the best possible price.