Page 26 - The Negotiator Mag 52pp

Lifetime deposits
Jamie Campbell, CEO of Fronted, agrees
that the traditional deposit is becoming unaffordable. “Living costs are surging in
the UK, putting more strain on people’s pockets, and increasing the chance of dipping into money they might have been saving for
a rainy day,” he says. “If people can’t find the deposit, it might mean they put off moving and continue to live in a place they’re unhappy in. It might make it difficult to relocate –
for example, for work – or force them into borrowing money from other sources and risk increasing financial pressure on them.” Fronted offers what it calls a Lifetime Deposit that aims to solve the dilemma for tenants moving property of stumping up a new deposit before they get their old one back.
“We front up the deposit each time you move, and you have 90 days to pay it back when the old deposit is refunded,” explains Campbell.
“Of the 11 million renters in the UK, more than half of those will not have savings, or help from friends or family, to front up a new deposit whilst they wait for their old deposit. That’s a major stress for renters. It’s a great solution to save on the stress of moving and overcomes the challenges renters face of not having a pot of cash to front up themselves.”
Of the 11 million renters in the UK, more than half of those will not have savings, or help from friends or family, to front up a new deposit whilst they wait for their old deposit.
Jamie Campbell CEO, Fronted
Renters’ Reform Bill failing
Campbell says the Government has failed to tackle the issue in the White Paper on rental reform. “The whole sector believes in a solution to the issue of rental deposits, but the Government is not doing enough in supporting them solutions come to market. I launched Fronted as a solution to this problem, and we are on a mission to help renters overcome the challenge of securing a new rental home with an upfront deposit.” Fronted charges tenants a one-off fee of £49 and gives them 90 days to repay the deposit they have borrowed.
Over at Reposit, CEO Ben Grech claims to offer the cheapest price for tenants and –
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We have a global insurance partner who backs up the cover on the Reposit product. The benefit of that for landlords is that the cover
is absolutely watertight.
Ben Grech CEO, Reposit
at eight weeks’ rent – the longest cover
for landlords, together with generous commission for agents. “We are seeing some indications that purses are getting a bit more squeezed though it’s too early to really say whether that is really linked to the economic situation,” he says. “We are offering the most generous cover available on the market, and as we go into a time of recession and higher cost of living, it tends to be the rent arrears claims that are the large claims, and that we find is very compelling to landlords and agents. They can bundle it with other USPs and offer to landlords as an added benefit.”
He adds, “One really important aspect is how robust is the protection that landlords are getting. Reposit is an independently authorised firm and we have a global insurance partner who backs up the cover on the Reposit product. The benefit of that for landlords is that the cover is absolutely watertight.” He also refutes the idea that tenants using Reposit might be less credit- worthy, pointing out that they all have
to go through credit referencing or find a guarantor – or pay six months’ rent up front.
“Our view is that cash deposits are supposed to work for everyone, so Reposit should work for everyone as well.”
Reposit also offers what Grech describes as a “very slick” end-of-tenancy process which is automated on its platform and integrated with Goodlord, The Lettings Hub, Vouch, and other letting platforms.
Choice is important
Sam Reynolds, CEO at Zero Deposit, agrees with Gary Wright at Flatfair that in the end, it should come down to the tenant’s choice, rather than being dictated by landlords and agents. “For some, cash deposits will work – but not enough tenants are actually given the choice to switch,” he says. “If you look at the US market, deposit replacement is far more embedded in the rental experience – they are probably four or five years ahead of where we are.
“You have to think that with the
innovations we have seen over the past six months and further improvements that deposit replacement will continue to take
a larger share of the market. But there will always be room for cash deposits because
for some it is the better option. People should be free to choose the right option for them.
Level of appetite increasing for deposit alternatives
“What we have certainly seen is the level
of appetite from landlords increase as they have become more comfortable with deposit alternatives.” He adds, “We’ve protected over £75m in deposit protection for landlords,
so it is established within a segment of the market and it is becoming more attractive, particularly given concerns around consumer finances.”
Reynolds believes the traditional deposit
is becoming increasingly unaffordable.
“The reality is the majority of tenants struggle to find the deposit,” he notes. “Lloyds published research last month that suggests that on average, the rental audience only has £500 in their bank account as savings. In a world where you have one deposit locked up in a previous property and you have to find the deposit for a new property, it is really difficult for tenants to find deposits.”
He warns that, unlike Zero Deposit, not all deposit replacement schemes are regulated. “It’s one reason why we’ve been able to make inroads with the landlord market because you have all the protection and security of a fully regulated insurance product.
“As consumer finances deteriorate, which may mean that things like claims increase, it becomes a slight unknown if you’re not working with a regulated provider.”
Zero Deposit charges a £49 set-up fee at the point the tenant moves in, and then £17.50 each year thereafter. The company is also set to launch a new scheme Flex, that allows tenants to pay the cost of the guarantee fee monthly – reducing the up-front cost from
35 days’ rent with a cash deposit to as low as two days’ rent.
It’s one reason why we’ve
been able to make inroads with the landlord market, because you have all the protection
and security of a fully regulated insurance product.
Sam Reynolds CEO, Zero Deposit
www.thenegotiator.co.uk
28/07/2022
15:37
TENANT DEPOSITS