Written by 
Deposit replacement schemes have been available for some time, but recently there has been significant increase in the marketing of ‘Deposit-free renting’. We are keen to hear from private renters in West Oxfordshire that have used or have been offered alternatives to deposits.
A recent article by Citizens Advice ‘Deposit Replacement Scheme – landlords’ loophole or relief for renters? ‘ outlines our concerns about some of these products. ‘We have seen a number of cases recently of tenants being offered the option of paying a monthly fee in addition to their rent as an alternative to paying a lump sum deposit at the beginning of their tenancy. Such schemes are marketed under names such as ‘No Deposit’, ‘Deposit Replacement’, ‘Deposit Free’ or ‘Zero Deposit’ schemes or options. Notably, these have increased significantly at a time when the Tenant Fees Act 2019 has limited the deposits which landlords can take, and the fees which letting agents are allowed to charge.
Amounts paid under a deposit replacement scheme are non refundable and offer no protection against future liabilities, and so they are not a deposit.
Tenants should be wary of deposit replacement schemes, and in particular should consider the cost over the anticipated duration of the tenancy when compared to a deposit now generally capped at 5 weeks rent in England.
Any deposit replacement scheme which is not truly optional is likely to breach the Tenant Fees Act 2019 or Renting Homes (Fees Etc.) (Wales) Act 2019, and any scheme which is not clearly explained might represent an unfair commercial practice or contain unfair terms. Such schemes may also be subject to FCA regulation regarding mis-selling.’
BBC News also reported ‘Concerns have been raised over “deposit-free” renting being mis-sold to tenants who do not understand the costs involved.’
Are you paying extra for a deposit replacement scheme? In some cases this may not be the best option for you. We are keen to hear your stories campaigns@citizensadvicewestoxon.org.uk
If you are considering using a deposit replacement scheme, we can advise you about the implications and what your rights are. Look here for our advice times and ways to get in touch.