The No Deposit Option, also known as the Reduced Deposit Option is increasingly becoming more popular as an alternative to the traditional deposit as the cost of living continues to skyrocket. Most tenants are finding it difficult to save up for the standard 5 weeks rent deposit, and even having to wait for up to 8 weeks for their money back at the end of tenancy is crippling. So, what is the next best alternative? What is a No Deposit Option?
A No Deposit Option or Reduced Deposit refers to a rental agreement where a tenant is not required to pay a security deposit to the landlord before moving in. Instead, the tenant pays a small, non-refundable fee that is no more than a week’s rent, which works out as a ‘reduced deposit’. It’s a good option for those facing financial difficulty, especially if it’s impossible to shell out a 5 weeks deposit, as well as the rent. It’s particularly beneficial for individuals who are new to the rental market, have a poor credit history or tenants who move frequently, as it eliminates the need to constantly save up for new security deposits (while the one previously paid is tied up!). It’s also a good option for students and people on low income.
Who benefits more from a Reduced Deposit or No Deposit Option?
Apart from paying the non-refundable charge, tenants will usually be liable to pay an annual fee that could be as little as £30, which acts an admin fee for tenancy renewals. It’s worth noting that for those tenants who are renting one apartment for the long term (10+ years), this annual fee might end up being higher than a traditional security deposit as the years add up and tenants continue their tenancy.
It’s worth mentioning that even though the initial “deposit” is lower, this does not mean that you are less liable for any damages caused during your lease. Tenants still remain fully liable for all dilapidations and rent arrears. The only difference here is that the standard deposit is not being held up to take care of such matters. Instead, an agreement is reached on what tenants owe, they simply pay for it and don’t have to wait around for part payment or a whole deposit refund. It clearly gives tenants the advantage of being able to save hundreds of pounds up front.
The No Deposit or Reduced Deposit Option is undoubtably helpful for some. It’s worth weighing up it’s pros and cons, so tenants should always assess their situation and decide if it is a more suitable option for them.