FCC Paragon 'Smart Deposit' scheme

sghughes42

SWMBO is looking to rent a small place short-term and we have found her a quite nice looking little house for £480 pcm. However, I am a bit concerned as the LA is asking a £300 'moving in fee' rather than a deposit. Apparently £50 of this goes on a credit check and the rest pays for something called a Smart Deposit Warranty which is in place of them taking a deposit.

Now, I've googled FCC Paragon - the company offering this warranty - and nothing bad has come up so far but the system seems a little unfair on the tenant. She will get nothing back at the end of the tenancy but seems to be paying for a warranty on behalf of the landlord to protect him against any damage she may cause. Also, the T&Cs of the scheme say that FCC Paragon have the right to chase the tenant for any costs incurred from damage or unpaid rent. This seems to suggest she is paying £250 to protect the landlord but could still be hit with a bill of up to £960 (two months rent is the maximum) should anything happen.

She has plenty saved so a putting a deposit down would not be an issue for her but as this is only intended to be a short-term move it is basically adding the equivalent of around £50 a month to the rent.

Does anyone have experience of these schemes and are there any things to be wary of? Are landlords open to offers, say offering 6 weeks rent as a deposit rather than using this scheme?

Also, on the credit check side, what do these usually involve? She has no credit history at all - the only loan she has is a student loan. She's never had a credit card, never rented, no CCJs. She has two part-time jobs, one of which only has about 6 months left on the contract which is why she is only thinking short term at the moment. She is of course hoping the contract will be renewed but can't guarantee this as it is down to funding.

Might any of this cause her problems in the credit check?

N79

sghughes42 wrote: »

SWMBO is looking to rent a small place short-term and we have found her a quite nice looking little house for £480 pcm. However, I am a bit concerned as the LA is asking a £300 'moving in fee' rather than a deposit. Apparently £50 of this goes on a credit check and the rest pays for something called a Smart Deposit Warranty which is in place of them taking a deposit.

Now, I've googled FCC Paragon - the company offering this warranty - and nothing bad has come up so far but the system seems a little unfair on the tenant. She will get nothing back at the end of the tenancy but seems to be paying for a warranty on behalf of the landlord to protect him against any damage she may cause. Also, the T&Cs of the scheme say that FCC Paragon have the right to chase the tenant for any costs incurred from damage or unpaid rent. This seems to suggest she is paying £250 to protect the landlord but could still be hit with a bill of up to £960 (two months rent is the maximum) should anything happen.

She has plenty saved so a putting a deposit down would not be an issue for her but as this is only intended to be a short-term move it is basically adding the equivalent of around £50 a month to the rent.

Does anyone have experience of these schemes and are there any things to be wary of? Are landlords open to offers, say offering 6 weeks rent as a deposit rather than using this scheme?

Your post is an excellent summary of these schemes. They protect the LL and cost the T some money to provide that protection. The other option is for LL's to charge higher rent to cover the costs of deposit protection (remember that greater regulation provides some protections but raises the costs for all people in a market - good and bad). Clearly this LL does not want the hassle of handling deposits and hence is making the rental conditional on this insurance. I suspect that if a number of High Court cases currently on the cards harden the tenancy deposit regulations too far then we will see this sort of insurance becoming a more popular alternative for LLs.

Also, on the credit check side, what do these usually involve? She has no credit history at all - the only loan she has is a student loan. She's never had a credit card, never rented, no CCJs. She has two part-time jobs, one of which only has about 6 months left on the contract which is why she is only thinking short term at the moment. She is of course hoping the contract will be renewed but can't guarantee this as it is down to funding.

Might any of this cause her problems in the credit check?

If true then her credit check will be fairly meaningless, although not negative. A good LL will use other referencing to base their decision but you should ask before paying the referencing fee.

xanthereanne

Hi, I don't know if this is much use to you, but I am currently having some right hassle with FCC Paragon.
Me and the other half are trying to arrange renting a property and we are doing this £200 deposit scheme thing. My other half is currently a student so they have asked for a guarrantor form from his Dad. His Dad currently works as a design engineer in Nigera - 4 weeks on/4 weeks off in the UK, and earns over £100k a year.
FCC Paragon are screwing us about, asking my OH's Dad for all sorts of information - including a recent request for 6 months worth of bank statements to prove what he earns etc, even though his accountant has given enough proof needed. He didn't even need to give the bank that sort of information when taking out his mortgage!
We were meant to get the keys 2 weeks ago and because of this messing around we probably wont get them for another couple of weeks, if ever!
A friend of mine had the same problem with her partner when moving in to their first rented property, as his Dad worked in the US.
I'm not sure if any of this will apply to you, but they seem pretty intrusive and wanting a lot more information than needed and to be honest I am sick of them messing us about and I'll probably end up pulling out soon enough.

puddy

what or who is swmbo?

Cannon_Fodder

http://www.urbandictionary.com/define.php?term=swmbo

princeofpounds

Sounds like a stupid scheme. The protection probably only lasts 6 months, what happens on renewal?

Plus the 'costs of deposit protection' are pretty miniscule relative to this cost. When will landlords realise that shifting costs onto the tenant essentially comes out of their own pocket by making the letting less attractive. That's £250 less the tenant has to spend in rent!

clutton_2

as a LL accepting a guarantor who does not like in the UK permanently is full of risk.... as it is not easy to take an ex-pat to court

i quite frequently ask to see 6 months bank statements if i have no other way of identifying how much a prospective tenant earns

re not disclosing salary details to a mortgage provider..... i find that most odd.....

sghughes42

princeofpounds wrote: »

Sounds like a stupid scheme. The protection probably only lasts 6 months, what happens on renewal?

My understanding is that the 'damage' part of the protection lasts the life of the tenancy but the 'doing a runner' part (i.e. cover for unpaid rent) part has to be renewed yearly. This *should* be paid for by the landlord - I wonder how many try and pass the cost on...

On looking further in to this I think it may be a benefit to those who are intending to rent long-term but for shorter term tenants it has to be weighed up carefully. SWMBO actually managed to persuade the landlord to take a deposit but was still charged £130 for agent fees so in effect only £170 was going on the Smart Deposit scheme.

Our take on that was that the choices are in effect to pay £170 you won't see again or lay down one months rent (£480 in this case) which you will get back at the end. If you can afford to have the deposit tied up then that is the cheapest way short-term. Longer term (and depending on the ratio of deposit to scheme cost) you may be more reluctant to have a large sum tied up so the scheme becomes more attractive.

One thing to consider though is that based on the wording it appears that if the landlord claims through the scheme then FCC Paragon will chase you to recover their costs so you will still pay for any damage either way and I wouldn't be surprised if costs were added if they had to recover it from you. Also, a claim can be up to 2 months rent so in theory they could claim back more from you than a deposit would be. The up-side is that the minimum claim is £150 which has to be proved so the landlord couldn't just claim for something minor.

LittleCharlie

Been totally ripped off by these guys and my landlord. FCC Paragon are a joke, stay away from them.

Last year I moved into the property, and my agents / landlord represented this as a "low deposit" scheme rather than a "no deposit" scheme. I hapily paid the £150 thinking I was getting a good deal.

I left my property in March this year. My landlord claimed my oven wasn't clean. He wanted £90 to do an industrial cleaning. I asked him to take it from the no deposit scheme and apparently they do not pay out unless the claim is over £150! How ridiculous! So I have been out of £150 AND £90!

Ridiculous. It would not have cost £150 to take out a bank loan to cover that up front rent for a year! Buyer beware, estate agents are mismarketing this all over the place!

I'd rather pay the £1000 up front into a safe scheme and know it will be there at the end of the tenancy, than pay £150 that I won't get back nor will it cover for any damage at the end of the property!

Between my landlord, the agent and FCC Paragon I've been screwed out of loads of cash. What a joke!

jockhasit

I contacted my bank Lloydstsb for advice, I wanted to change a 6.09% fixed rate mortgage (locked in until April 2012) to something cheaper. I was advised that there was a 3.49% tracker (still only until April 2012) that would incur no extra payment other than an administration fee (£75 approx). I am now told (after completing all the paperwork) that there will be a fee of £784 for repayment. I stressed that I am not repaying anything just changing to a more affordable monthly repayment. How can they justify £784 when this whole operation can probably be done in less than half an hour at the press of a few buttons. HOW ! HOW! HOW!

Lozzy0603

FCC Paragon credit check is a right pain. Not only are you required to jump through hoops to complete the check; they make you PAY for the privilege!!! Then when they are done taking your money, they will spam your email account with "newsletters" even if you tick the "don’t spam me" button. The nerve of these people to force you into a service you did not even ask for then advertise at you. Unbelievable.
Do not bother writing to them to ask for a copy of all the data they hold on you under the data protection act, they will want to charge you for that as well. Their T&Cs box is along the lines of they will hold data for as long as they wish to on behalf of the agent and you cannot do a thing about it.
Not happy about this lot. Been a great tenant for over ten years, never heard of anything like this ten years ago. It is invasive, irritating, upsetting and unnecessarily taking peoples money. This credit checking/credit report business needs some serious government regulation to bring it back under the control of little people. :-(