We’ve seen a rise of properties lately, offering a zero-deposit option for those moving in. Now, we’ve already discussed why a deposit is paid for a tenancy and why it is so important for both landlords and tenants, so how is it possible that some properties are available without one? At Brighton Accommodation Agency, we’ve partnered with Zero Deposit to bring this option, so we’ll use their framework for our examples.
Properties that are available with no deposit generally offer an insurance backed alternative. This, as with all kinds of insurance, will require the payment of a premium in order to cover the risk for the landlord. However, it doesn’t negate any costs at the end of the tenancy. Should there be arrears or damage to the property, these will still need to be paid for when the property is returned.
As an example, it’s worth considering an example of a couple moving into a one bedroom flat for £825pcm. Usually, for a 6-week deposit, they would have to find a deposit of £1,142 to pay in advance of the move in. They would be without this money for the duration of the tenancy but assuming all is well when they move out, they would get all of this money back. If they elected not to pay this amount and used a zero deposit scheme instead, they would pay a fee of £190 in lieu of this deposit, meaning they wouldn’t have to find quite so much cash to move. They would also have this money throughout their tenancy. However, the fee they have paid will be gone and will not come back to them.
In the same thought, if there was damage to the property that was the tenants’ fault when they leave to a total of £150, this would be deducted from the deposit they paid and the remaining £992 would be paid to them. However, had they taken a zero deposit option, they would be required to pay this at the end of the tenancy, as well as the fee taken at the outset.
Things always appeal differently to different people. Some would value keeping the money in their pocket far more than the fee of one week’s rent, whereas others would see it as an unnecessary expense when there’s no difference on liability for costs at the end of the tenancy. Is this something you’d consider? Let us know your thoughts.
Zero Deposit is available on many Brighton Accommodation Properties from March 2019 onwards, ask us about it when viewing a property.