New research reveals that deposits of five weeks' rent don't provide landlords with enough protection in more than 10% of cases.
Alternative deposit firm Reposit studied 20,000 tenancy agreements dating back to 2016 and found that landlords needed to reclaim more than five weeks of rent to cover costs such as rent arrears or damage in 14% of these agreements. However, during the same period, 56% ended without any costs incurred by the tenant.
CEO Ben Grech says it highlights how cash deposit schemes don't always provide landlords with the right level of protection because they are capped at five weeks' rent by law while at the same time, tenants often struggle to find the up-front cash.
Reposit's product gives landlords eight weeks' worth of rent and helps tenants, who pay one week's rent as a non-refundable fee, he explains.
'We have created a solution which is more appropriate for the reality of tenancies in the UK, and which works more efficiently and fairly for each stakeholder in the rental process.'�
Tenants remain liable for any damage at the end of the tenancy, with any disputes resolved through an independent resolution service within 14 days.
Reposit's insurance-backed product structure means that landlords are guaranteed payment if a tenant defaults on any charges normally covered by a cash deposit.
The government's recently updated How to Rent guide explains how tenants can be offered deposit replacement products as an alternative to a cash deposit.
Grech adds: 'It's a great step forward, showing that deposit alternative products are being recognised as a valuable solution for the industry.'�