The introduction of zero deposit for tenants looking to let a residential property is available in various forms. Generally speaking it is an indemnity insurance policy that is purchased by the tenant and can have an annual renewal cost like most insurance policies.

The tenant positives are:-

The property would be attractive to a wider audience as no physical deposit would be required and it makes letting more affordable for the tenants.

• Allows you to start the rental process quicker, no longer having to save for a deposit
• Your moving costs are reduced as there is no need for a large upfront deposit to be paid
• Monies usually tied up in a deposit can be utilised to help with move in costs and things such as furniture for the property
• No risk of the deposit not being paid back, because there wasn’t one
• Once agreed, the scheme will remain active until end of tenancy

The landlords risks are:-

• The tenant is unable to save a deposit so are they able to afford the rent?
• A third party will have an input on any claim against the deposit which offer less control for the landlord.
• The new zero deposit is untested and this could be a realistic concern.
• The appointed letting agent has less control over the check out and cannot complete the work for the landlord that has been in place for many years.
• Hampshire Land & Lettings do not utilise or recommend any zero deposit schemes as it weakens the landlords position at the end of the tenancy with dilapidation’s and rent arrears. It is not a tried and tested method and as when applying for a mortgage the lesser the deposit the greater the risk to the process and seller. Our duty of care is to the landlord and what is essential is that there is a procedure in place should an application need to be made against the bonded deposit. Insurance companies have strict criteria on any claim and therefore it is not something that can be recommended to our clients.