Tenant focus: Zero deposits
A new initiative is becoming popular with both landlords and tenants. It’s where the tenant takes out an ‘insurance’ to guarantee landlords won’t lose out if the tenant causes damage, instead of finding a six weeks deposit in addition to the first month’s rent.
One of the schemes is called The Zero Deposit Guarantee (ZDG) and tenants pay the equivalent of one week’s rent to Zero Deposits. This gives the landlord the same protection as a six-week security deposit. In addition, the tenant pays a £26 administration fee each year. When the tenant leaves, any disputes are assessed by The Dispute Service (TDS).
If as a landlord, compensation is due, Zero Deposits pays this to you and chases the tenant to cover the cost.
The scheme’s good for tenants, because it reduces their up-front costs and they don’t have to wait for a deposit to be returned at the end of the tenancy. But landlords can benefit too:
- Quicker lets: you don’t have to wait for tenants to pay their deposit
- Time and money saved: No requirement to register the deposit with a protection scheme
- Any compensation is paid within two days
In addition, bearing in mind the government are planning to limit deposits to 5 weeks, if you are owed more than this, your compensation isn’t necessarily tied to this limit.
We have chosen to work with Zero Deposits as they are covered by Munich Re, which is one of the world’s largest re-insurance companies, and the company is regulated by the Financial Conduct Authority.