Renters will no longer have to pay deposits under new tenancy scheme

Tenants will no longer have to fork out for costly deposits when renting a home under a new tenancy scheme. 

The majority of landlords require their tenants to put down a deposit in order to secure a property; on average, renters have to put down a £1,054 deposit to secure a tenancy, according to the Office for National Statistics. 

But now, a new scheme launched by rent guarantor Housing Hand could very well be putting an end to expensive deposits.

Their scheme means that working professionals and students alike can move into a property without coughing up hundreds of pounds for a deposit.

@schluesseldienstvergleich_eu / Unsplash

Instead, renters will have to pay a £25 joining fee and and a one-off payment for the scheme.

The one-off charge is the equivalent of 20% of one month’s rent to Housing Hand, which is paid in monthly instalments stretched across the length of the tenancy.

For example: If you paid £500 rent a month for twelve months, you would need to pay £100 over one year – which works out at roughly £8.33 a month, plus the £25 fee up-front.

However, there’s a catch; landlords aren’t legally obliged to accepting Housing Hand as a rent guarantor, so there’s no guarantee they’ll agree to waiving a deposit.

Soroush Karimi / Unsplash

Renters will also need to provide personal information in the application, such as proof of identity, proof of address, and evidence that you earn at least 1.5 times your share of the monthly rent if you are a working professional and not a student.

And, while Housing Hand says using the scheme will not affect your credit score, a missed rent payment means Housing Hand would pay the rent on your behalf, something renters would be required to pay back.

Oh, and tenants won’t get the fee they paid to Housing Hand back at the end of the tenancy, though I’m sure we can survive without £25.

However, experts have warned renters about using these type of schemes that offer the option to move in without a deposit.

@benchaccounting / Unsplash

Generation Rent deputy director Dan Wilson Craw said: “Renters should be careful about using schemes like this as they are not regulated and ultimately cost more than traditional deposit schemes as they aren’t refundable.

“We have heard from tenants who have used other deposit-free schemes and found that after paying for the coverage every month, they move out and are hit by a large claim for any damage or wear and tear that is very difficult to challenge.”

For more information, head over to the Housing Hand website.