If you are opting for the no deposit option, it is important to understand what it requires and how it works. It can’t be stressed enough that not paying a security deposit does not mean you are not liable for the upkeep of the property you are renting. You will still remain fully responsible for all dilapidations and rent arrears.
Once your landlord offers to forgo the need to submit or pay a security deposit, companies such as Zero Deposit, Reposit or Flatfair will be used to sign up for the No Deposit Option or Reduced Deposit Option. The company will act as an insurer, guaranteeing payment for damages to the property. If any damages occur, you, the tenant are responsible for reimbursing the landlord.
Here’s how Reduced or No Deposit Options work:
- The tenant is offered the no-deposit option
- After successfully completing referencing, affordability and credit checks, the tenant is invited to sign up and pay the no-deposit fee or reduced deposit option of just 1 week’s rent.
- If the checks fail, a guarantor will be required (or the tenant can pay 6 months' rent upfront if the landlord agrees).
- Once the tenant signs up and pays the fee, they commit to being liable to pay any end-of-tenancy charges if applicable.
End of tenancy:
- If any amount is owed at the end of tenancy, it will be registered by the landlord onto the platform being used, along with any relevant evidence.
- The platform or company such as Reposit will then notify the tenant, giving them 7 days to respond. The tenant may either accept and pay for the charges or dispute them.
- If the tenant accepts and pays, the money will be transferred to the landlord, closing the case.
Dispute at end of tenancy:
- If a tenant disputes the charges, they must first propose a settlement to the landlord, who has the opportunity to accept or reject it and propose a final amount.
- If no agreement is reached, the tenant must pay a fee of around £60 to raise a formal dispute- the fee is refunded if their dispute is valid. It goes without saying that the tenant has to be sure of the dispute’s validity, so as not to lose even more money.
- The case is then sent to an independent 3rd party adjudicator (ADR), who will issue a binding verdict in less than 14 days.
In most cases, the no-deposit platforms successfully recover money owed from tenants, Otherwise, insurance companies will cover the charge. It is important to mention that the non-refundable no-deposit charge initially paid cannot be offset against costs at the end of tenancy. Again, just like with a normal deposit, you will remain liable for any amount due at the end of tenancy which may include cleaning fees, costs for repairs and outstanding rents.
If you don’t pay the charges at the end of tenancy, the no deposit platform such as Reposit will pursue necessary legal action to recover the outstanding debt even after the charge has already been paid to the landlord by the insurance company. Remember though, you will still have the choice to use the no-deposit option or the normal cash deposit at the start of your tenancy.
If you have further questions or you would simply like to learn more about what the No Deposit Option has to offer, check out our FAQs