Page 28 - The Negotiator Mag 52pp

Welcome Ome
Insurance group Hamilton Fraser operates one of the three official government deposit protection schemes, My Deposits, though
it has recently launched a new insurance- based product called Ome. CEO Eddie Hooker doesn’t believe the traditional deposit is going to go away any time soon.
“The vast majority of landlords feel more comfortable with a cash deposit,” he states. “In London you’ve this massive demand for property and a massive supply issue, so a landlord is probably going to have 10-12 applicants all vying for his property and he’s going to go for the cash deposit. Tenants will naturally try to find that deposit.
“The only way they can guarantee that the tenant can afford the rent is if the tenant can stump up a five-week deposit and the first month’s rent. And I think a lot of landlords look at it that way, if you want the truth.”
He adds, “I don’t think the deposit is the problem, it’s the rent and the scarcity of property. Everyone focuses on if you could get rid of the deposit the rental market would change overnight. That’s rubbish; the biggest problem is the level of rent and the scarcity of property.”
However, Hooker does see deposit alternatives becoming a bigger player in the market, which is why Hamilton Fraser has
‘If you could get rid of the deposit, the rental market would change overnight’ – that’s rubbish; the biggest problem is the level of rent and the scarcity of property.
Eddie Hooker CEO, Mydeposits
launched Ome. “We wanted to offer choice,” he explains. “What we had an issue with was the up-front, non-refundable cost of the replacement.
“People offer an up-front premium and lasts for a year or two and then you have to pay another admin fee to renew it – it’s not linked to the length of the tenancy.
“We looked at it and thought a smaller monthly payment would be more affordable and more flexible.” Ome has a £30 set-up fee and tenants then pay £10 month per property, which offers five weeks’ protection for damages or unpaid rent to landlords.
If for any reason the tenant stops paying the membership fee, the cover remains in place.
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It gives the agent more
control and means they immediately receive remuneration, rather than waiting to receive commission from a third party.
Heidi Shackell CEO, The Lettings Hub
White label scheme
The model used by The Lettings Hub is slightly different to others in the market
as it allows the agent to create their own branded scheme to offer to tenants, rather than tenants buying a deposit alternative directly from a third party. “It gives the letting agent greater control over the process and how much revenue they generate from the product, as the agent sets the charge the tenant pays, and direct control over the claims process,” said Heidi Shackell, CEO.
The Lettings Hub’s deposit replacement product is administered via its pre-tenancy platform, BOX. Agents can choose to use it as a stand-alone product or make use of the full features of BOX, which include features such as property insurance and utility management. BOX is also fully integrated with Reposit so agents also have the choice of using its product instead.
The Lettings Hub is the only insurance- based product not to offer agents a commission directly, but because it is a white-label service, they can add their own fees and pass them on to the tenant. “It gives the agent more control and means they immediately receive remuneration, rather than waiting to receive commission from
a third party,” Heidi Shackell added.
Physical deposit is best
The Deposit Protection Scheme (DPS) is
an another of the three officially authorised deposit-holding schemes. Perhaps unsurprisingly, the DPS doesn’t believe deposits are becoming dated, and points out that over the past five years, the number
of deposits it safeguards has increased by
30 per cent. Matt Trevett, CEO is quite clear of their value, today and into the future.
“We strongly believe that a physical deposit, safeguarded by an independent third party, is by far the best way to ensure that
landlords can have peace of mind over the condition of their property and their tenants’ responsibility towards it,” he said. “And tenants can be sure that, if they treat the place they live with respect and follow the tenancy agreement they’ve signed, that they will receive their money back in full when they move out.
“We think deposits of that size are a fair reflection of the risks that landlords take
on when lending a property to someone else to live in – and of the responsibilities that tenants take on when they move in.”
The DPS currently safeguards more than 1.8 million deposits, and the organisation says that agents, landlords and tenants place particular value on its impartial, independent dispute resolution service run by experienced, qualified, legally-trained adjudicators.
We strongly believe that a physical deposit, safeguarded by an independent third party, is by far the best way to ensure that landlords can have peace of mind.
Matt Trevett CEO, Deposit Protection Scheme
Talks on transferring deposit
“Nevertheless, in the current economic climate we understand that saving for
that first deposit in particular is likely to be more challenging,” said the spokesperson. “That’s why we’re speaking with other organisations to offer support in creating ‘deposit loans’ to their employees or members – as well as looking at introducing changes to our systems that allow a tenants’ deposit to ‘transfer’ to their next property.”
Many in the industry had hoped that the Government’s recently published White Paper, A fairer private rented
sector, (aka Renters’ Reform Bill) would mandate giving tenants the right to choose between a traditional deposit and a deposit replacement scheme. However, no such proposal was included.
It may well be, however, that market forces will make the decision for landlords and agents. The cost-of-living crisis has yet to make its full impact, but when tenants start getting their winter fuel bills in six months’ time, the industry will get a dramatic wake-up call.
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TENANT DEPOSITS