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New Tenancy Scheme Means Renters Won't Have To Pay Deposits

Simon Catling

| Last updated 

New Tenancy Scheme Means Renters Won't Have To Pay Deposits

Featured Image Credit: Pexels

Renters potentially won't have to pay a deposit to get a new home thanks to a new tenancy scheme, which means landlords won't be able to get you to fork out hundreds - or even thousands - of pounds before you've even started living in a property.

As The Sun reports, it is currently illegal for your landlord to ask you to pay a deposit of more than five weeks' rent.

For example, if you were paying £500 a month in rent, you shouldn't be paying more than £625 for a deposit.

Now Housing Hand, a rent guarantor, has launched a scheme where working professionals and students can move into a property without coughing up for a deposit - although there will still be fees.

Housing Hand would require you to pay a £25 joining fee to enter the scheme and a one-off payment as well.

This is an extension of the Housing Hand guarantee, meaning a tenant can only be granted the depositless service with the guarantee.

Credit: Unsplash
Credit: Unsplash

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

So if you paid £500 rent a month for 12 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.

On average, renters have to put down a £1,054 deposit to secure a tenancy, according to the Office for National Statistics, which makes joining a scheme like this a no-brainer.

There is a catch, however.

There's no guarantee that your landlord will agree to waiving your deposit and accepting Housing Hand as a rent guarantor, which would mean you would have to hunt for another landlord who would agree to sign up instead.

Credit: Pexels
Credit: Pexels

To join, you also need to provide personal information in your 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.

According to Housing Hand, the scheme will not affect your credit score, as it does not do a hard check on your file.

However, if you miss your rent payment and Housing Hand has to pay the rent on your behalf, you will be required to pay the money back.

A final catch is that once you move out, you won't receive the fee that you've paid to Housing Hand back. It doesn't work like a deposit.

There are other companies that offer similar types of deals. However, experts have warned renters about using schemes offering you to move in without a deposit.

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."

Topics: UK News, Property

Simon Catling
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