The latest research by Zero Deposit, the tenancy deposit alternative, has found that over three quarters of tenants (76%) are in the dark about the alternative options available to them and while 59% would have preferred to opt for a deposit alternative scheme, just 13% were given the option.
Zero Deposit surveyed 1,107 UK tenants who have moved into their rental property within the last two years.
Of those surveyed, 49% of respondents classed themselves as professional tenants, with families also making up a large proportion of the market (33%).
85% said they were asked to pay a deposit in order to secure their rental property – 67% stating their deposit was capped at five or six weeks rent, while 18% couldn’t recall what they paid.
43% of tenants who paid a deposit did so to their landlord, while 57% paid the landlord’s letting agent.
Tenants unaware about deposit alternatives available
Zero Deposit found that just a quarter of tenants (24%) were aware of deposit alternative schemes, with 76% in the dark about the other potential options available to them.
What’s more, 87% stated they were only offered the route of a traditional rental deposit when securing their last rental property, with just 13% given the option of a deposit alternative.
However, 59% stated that, given the chance, they would have opted for a deposit alternative scheme if it allowed them to reduce the initial cost of securing their rental property.
When asked how they would have used the money saved on a rental deposit, the main reason given was the ability to pay other outgoing bills, while helping to cover the actual cost of renting ranked high, as did the ability to start their own savings pot.
Tenants also in the dark about deposit protection
Almost a third of tenants (31%) surveyed by Zero Deposit also admitted that they don’t know whether or not their deposit is protected by a tenancy deposit scheme.
58% said it was protected by a custodial or deposit protection scheme, while 11% are covered via an insurance based scheme.
30% also stated that they are in the dark when it comes to the process of having their deposit returned to them, however, 82% were confident that they would receive their full deposit when the time comes.
Sam Reynolds, CEO of Zero Deposit said, “A rental deposit is one of the biggest obstacles many tenants face when it comes to securing somewhere to live. So it’s quite astonishing that as many as 76% are unaware about the options available to them when it comes to potentially bypassing this considerable upfront cost.
When given the choice, tenants showed a clear preference for a deposit alternative that offered regulatory protections. This isn’t unusual as many are purchasing the product for the first time and naturally prefer the security provided by FCA oversight. Whether it’s a deposit alternative or a traditional deposit, it’s essential all parties understand the product clearly and are offered a fair and unobstructed choice of both options.”
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