No deposit rentals

beeg0d

Im looking to move rented home soon and a lot of the propetys ive seen advertised recently are marketed as neading no deposit on discussing this with some of the agents it appears to be some sourt of insurance policy (you pay 1 weeks rent as an insurance premium then dont need a deposit). The agents ive spoke to seem to be pushing this method (im assuming due to kick backs from the insurance providers) with some of the propetys ive been instreasted in having no option to opt out (ie they wont accept a deposit on the propety only the insurance sceme).


Now im always a little septical bout what estate/letting agents push so i was wondering if anyone knows of the posatives (and more importantly negatives) of such sceams.

Comms69

The money is non refundable


The T&Cs of any 'insurance' product must allow 14 days to cancel; but it's not clear who takes out the insurance. Because typically it would be the renter, but obviously cancelling the product removes any potential claim the LL has.




It's all very unclear on what is actually being sold.

G_M

Who takes out the policy? The tenant or the landlord/agent (using the tenat's money)?
Who is the named policy holder? Tenant or landlord/agent?
If the policy is in the tenant's name, he'd have 14 days to cancel.
But if the policy is in the tenant's name, the landlord could never claim without the tenant's cooperation...
So I assume it must be in the landlord's name?

The positives for the L are that

* he does not have to use a protection scheme.
* he can make a claim (presumably) if the check-in and check-out reports show damage - no nasty dispute with the tenant who would not be involved

Positive for the tenant is
* as above- no disputes over damage, cleaning. Tenant just walks away leaving the LL to sort out any claim with the insurer

Negative for the tenant:
* the money is non-refundable. One weeks extra rent paid upfront and that's it gone.

Of course none of that precludes the landlord from legal action against the tenant if, say, the insurer did not pay out.

Hmmmm.... I wonder if the insurer can take action against the tenant to recover any amount claimed and paid out...........?

As a landlord, I'd not use this scheme.
As a tenant, I'd (try to ) avoid using a landlord who uses this scheme.

Comms69

G_M wrote: »

Who takes out the policy? The tenant or the landlord/agent (using the tenat's money)?
Who is the named policy holder? Tenant or landlord/agent?
If the policy is in the tenant's name, he'd have 14 days to cancel.
But if the policy is in the tenant's name, the landlord could never claim without the tenant's cooperation...
So I assume it must be in the landlord's name?

My only interpretation in terms of claims, would be that the insurance has 3rd party liability - much like car insurance.


I may pop into a local agent that operates the system and ask them about it.

beeg0d

To be honest i dont have a great deal of information on the policys to answer the questions, Im planning to move in 2-3 months and just started premlimary searches in the area im looking to move to over the past couple of days and noticed a good numberof the propetys i was looking at being advertised as no deposit never really heard of this senero before so called one of the agents for some basic information and pretty much all i got was "you pay 1 weeks rent as a (none refundable) fee and you dont need to pay a deposit". Ive never heard of that before and so my first port of call for something todo with renting ive not heard of was here.


They seem to be fairly common around the area i was looking at (north London) with several agents offering propetys on them so was hoping someone here already had some experence with them.


Obviously i know the main + (no need to hard over a large deposit) and the obvious negative (the cost is none refundable even if you had over the propety in better condition then you got it).

Chris_W_2

It will be a Zero Deposit scheme - the LL will have agreed to offering this but my understanding was the tenant can opt to whether they take the product or pay a cash security deposit.

If you "pass" referencing you will get a call from the provider to explain the product and its terms and conditions and then you decide if you want to take it or pay the deposit

The agent CANT insist that you take the insurance based zero deposit - these products are the becoming more common

Find out who the provider is and google them and see what their website says for more information

Comms69

Chris_W wrote: »

It will be a Zero Deposit scheme - the LL will have agreed to offering this but my understanding was the tenant can opt to whether they take the product or pay a cash security deposit.

If you "pass" referencing you will get a call from the provider to explain the product and its terms and conditions and then you decide if you want to take it or pay the deposit

The agent CANT insist that you take the insurance based zero deposit - these products are the becoming more common

Find out who the provider is and google them and see what their website says for more information

I think you are mistaken. Whilst the agent cannot force a product on a tenant. There is no automatic right to a tenancy. They simply refuse to contract with them.

G_M

Chris_W wrote: »

The agent CANT insist that you take the insurance based zero deposit - these products are the becoming more common

True. But equally the agent CAN refuse to grant the applicant a tenancy if they decline the insurance.

saajan_12

Key things I would confirm with the agent (and get in writing that the tenancy contract is on this basis):

what happens if there is damage?
- does the LL claim from the insurer?
- does the LL have the option to claim from tenant via court?
- does the insurer have the option to claim from tenant via court?

If No, then you're basically fixing the cost of any damage at 1 weeks rent.. its up to you whether you think that's an under or over estimate.

If Yes, then its still a longer process for the insurer / LL to claim in court compared to a deposit, so that might discourage the LL from "trying it on" with spurious claims. However you don't have a free arbitrator from the deposit scheme, so you'd either have to agree with the LL or face court.. not necessarily more scary / cumbersome as many things are handled by letter, but you could face court costs if they find in LL' sfavour.

Chris_W_2

I dont think thats right - if an agency advertises that zero deposit is available its on the basis thats its the Ts choice once they have passed the referencing and then the T chooses if they want to pay a cash bond or goes with the insurance - the LL will also have to have sign a document ie terms and conditions that explains its not compulsory to a contract offer

Its also my understanding that if the LL or agency insist they take the insurance or they wont offer them the contract this is unlawful not to say it doesn't happen but it is unlawful

I have checked the above with someone who works for zerodeposit.com that I know

ThePants999

G_M wrote: »

Hmmmm.... I wonder if the insurer can take action against the tenant to recover any amount claimed and paid out...........?

Yes, absolutely. The tenant is still on the hook for any damage they cause. The insurance is against the tenant not paying, not the damage.