Could renting without a deposit become the new norm?

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Charles Weller, Managing Director, Palace Gate Lettings

In short no! I think it’s highly unlikely to become the norm, as deposits would be replaced with an insurance backed deposit policy. As with any insurance, claims would be a lengthy and difficult process with many insurance policies trying to avoid a pay out, with little recourse for the Landlord to resolve claims through any independent adjudication! There is also uncertainty as to what these schemes would cover, such as  cleaning and outstanding rent, or whether it would be damages only.  Without a deposit there would be concerns that tenants would take less care of a property, with their own money not being at stake. Based on this we don’t think landlords would want to go down this route. From June 1st, 2019 deposits will be limited to 5 weeks rent on all Assured Shorthold or Licenced tenancies.

Graeme Young, Lettings Director, Marsh & Parsons

Scrapping deposits is a hot news topic at the moment, but there is no getting away from the fact that a large number of landlords typically favour an old-fashioned cash deposit as security, not only against the condition of the property, but against any shortfalls in rent that can occur during or at the end of a tenancy. It is a traditional and trusted system, with clear and straightforward protection from the Tenancy Deposit Scheme (TDS), and whilst the new insurance-type deposit replacement schemes are in their infancy, I see that cash deposits will remain for the foreseeable future. The actual amount of deposit that can be held during a tenancy will reduce from the June 1st anyway, providing tenants with reduced costs at the start of the tenancy where the insurance schemes are not available.

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