Landlords and tenants are divided by new insurance based tenancy deposit scheme.
Landlords worry they may not be covered for damages at the end of tenancy and tenants are concerned deposit payments will not be returned.
Research reveals concerns around new insurance-based schemes – with 10% of tenant and landlord respondents unaware such schemes existed.
Both landlords and tenants are split on the effectiveness of new insurance-based tenancy deposit schemes.
Research conducted by letting agent Upad.co.uk revealed concerns from both landlords and tenants regarding various aspects of these schemes.
Specifically, landlords were concerned that the insurance would not cover them fully for repairing any damage at the end of the tenancy.
Some tenants felt that despite sometimes having to borrow money to pay their deposit, at least in the majority of cases they would get their deposit back, whereas paying for the replacement insurance would see them making payments they’d never get returned.
A number of schemes have recently been launched that aim to resolve tenants’ difficulties in raising the costs of a deposit by instead offering a monthly insurance payment.
The Upad research showed tenants overall were more in favour of, and enthusiastic about, the schemes than landlords were.
But less than 10% of both groups were even aware these new schemes existed.
When these new tenancy deposit schemes were put to them, landlords were unconvinced they would have any real impact:
- 57% claimed they had never had a tenant struggle to raise a deposit
- Only 35% thought finding tenants would be easier if they offered this scheme as an alternative to requesting a deposit
- Only 14% thought an insurance deposit scheme was a better idea than taking a deposit.
Although a higher proportion of tenants appeared to support these new schemes, in some cases those in favour were still in the minority:
- 35% thought an insurance deposit scheme was a better idea than taking a deposit
- 37% said they would definitely rather pay the monthly insurance than a deposit
- 62% had no concerns about paying a monthly sum instead of a deposit.
Portfolio landlord and Upad founder and CEO James Davis said: “Alternatives to paying one-off deposits are always welcome, and these schemes are a great idea.
“Immediately, tenants will be free of the struggle of having to raise a deposit for a new rental before they have got their existing deposit back, and those who are unable to raise a deposit at all, or have no means of borrowing the money, could find themselves able to rent a far wider range of properties than they previously could.
“I am definitely in favour of such schemes and hope in the coming months a greater proportion of landlords will also take this point of view.”
Here’s the survey in an infographic format.