Rental deposit replacements - what are they and do they work?

Posted: 30/11/2019

hand-101003__180.jpg

Rental deposit schemes are growing in popularity, but what exactly are they, how do they work and are they any good? It can be expensive these days to start renting. Tenants are required to pay both rent in advance and a deposit. This is usually at least one month's rent (at Key One we recommend more). That can easily be £1000. For tenants on a low income finding both rent and deposit can be a problem. That's were deposit replacement schemes (DRS) come into play. They effectively guarantee the landlord a monetary deposit in the event of a breach such as rent arrears or damages, however the tenant doesn't pay a physical deposit. Instead they pay a fee to the DRS operator, which can be one-off or monthly. In some lower demand locations, it can help agents/landlords to let more quickly. However, one opinion is that as it is not the tenant's deposit at stake, there is a reduced incentive to comply with the tenancy terms, but if the DRS have to pay the agent/landlord, they go after the tenant for the money. Generally pay outs are quicker than having to wait for a deposit scheme adjudication decision, plus the deposit can be higher than normal, giving the landlord even greater protection. If you are a landlord and interested in letting or management services we at Key One won't charge you an arm and a leg for it. Our services are fair priced and VAT feee. T: 028 9045 6162 E: keyone@btinternet.com

Back to News

 Click here for a competitive quote for Landlords Insurance  property-ombudsman NI Tourism Certified Accommodation to Rent