Zero Deposits – What are they?
What?? A Landlord doesn’t take a deposit from the Tenant?? Surely this can’t be right?? Well, not all is as it seems here, what I am talking about is something called a ‘Zero Deposit Option’ and the theory behind it is to give potential tenants more financial freedom whilst still providing the same protection for landlord’s who will accept a Zero Deposit as a traditional cash deposit does. Landlord’s can still claim against the Zero Deposit if terms of the tenancy agreement are broken in the same way as they do now. The Zero Deposit company would pay the landlord if the claim is upheld and then the Zero Deposit company would take up the costs with the tenant separately meaning the tenant still has a vested interest in looking after the property in the same way as they do now.

What’s the catch?
For the landlord the upside would appear two-fold. The first upside is that they are covered for all of the same things that a traditional cash deposit would cover in a tenancy agreement contract up to a value of 6 weeks contractual rent. The second upside is that it should help with a quicker rental of the property as more potential tenants would have the finances to take the property. More potential tenants should equate to smaller void periods between tenancies.
For the tenant there is a little more to consider, the upfront cost of moving into a property is reduced as they don’t have to find a large deposit sum (normally 5 weeks of the contracted rent) BUT instead they pay for a Zero Deposit policy. This is non-refundable so they do not get this money back at all but it is only going to cost 1 week of the contracted rent so a large sum of 4 weeks of rent doesn’t have to be found upfront. This is where careful consideration for the tenant has to come in.

Is this product right for them?
Yes, the tenant has less money to find upfront but there is a sum of money (1 weeks rent) that they definitely won’t get back whereas with a traditional cash deposit, if they meet all of the obligations under the tenancy agreement and hand the property back in the same condition as it was given, then they would normally receive all of their cash deposit back.

What are your thoughts Landlords? Call Bricknells to discuss the pros and cons to see if this works for you.