A BBC investigation has suggested that some letting agents are not providing tenants with the full picture when selling deposit alternative schemes, resulting in “hidden costs” later being charged to tenants.
While some tenants have found themselves foul of as much as a month’s rent for not following the guidelines, these replacement schemes otherwise offer a solution to the cash flow problem of stumping up large sums for a rental deposit upfront.
Hamilton Fraser, parent company of mydeposits and recently launched new deposit replacement scheme, Ome, believes the issue isn’t with the option of deposit replacement schemes themselves, but with the more deep-rooted problem of transparency across the UK rental sector.
Eddie Hooker, Group CEO of Hamilton Fraser said, “As a supplier in the industry of both traditional tenancy deposit protection through mydeposits and one of the new, deposit replacement scheme alternatives, we consider it important to ensure that tenants have full choice as to whether to find a traditional upfront deposit or to manage their cash flow by opting for a deposit replacement product.
“However, tenants must always be fully aware of the terms and conditions of whatever choice they make. With a traditional deposit, this means reading the tenancy agreement to understand when a landlord can deduct monies from their deposit, and for a deposit replacement they understand that they will always be responsible for deductions at the end of the tenancy even though they will have paid a fee for the product.”
Hooker added, “My issue has never been with the replacement products themselves, rather how they are sold and by whom. I’m not sure that all products put the tenant at the heart of the decision-making process even though the law states that tenants must be offered a choice of both a traditional deposit and a replacement product”.
“But I believe the deposit replacement space has a real opportunity to not only push the changing face of the rental sector towards a tenant first mentality but to do so with a proper set of industry guidelines that hold everyone accountable to the same standards.”