Deposits can often feel like barriers to taking on a tenancy. In the UK, tenants typically pay up to five weeks’ rent as downpayment, plus a month rent upfront. Initially you will charged a holding deposit of up to a week’s rent, payable in advance, to secure a property, this is then deducted from the first months rent.

For assured shorthold tenancies which began post-April 2007, deposits must be paid into a government-approved tenancy deposit scheme (TDP). They can be held with the Deposit Protection Service, MyDeposits, or the Tenancy Deposit Scheme. But, whichever way you look at it, it’s a fair bit of money to find before you’ve even moved in somewhere.

And, last month, The Big Issue reported that ONS statisticians had recorded a 6.2% rise in rents paid by tenants across the UK in the year up December 2023. What’s more, there’s often intense competition when homes come on to the rental market, with some properties being snapped up in hours.

But the zero deposit scheme is here to help, with an alternative to traditional cash deposits. It’s designed to make the whole business of moving in to your next home quicker and easier, as well as fairer and more affordable and accessible.

How does it work?

For landlords and tenants, zero deposit schemes from reputable providers work in that both tenants and landlords know exactly what they’re getting.

Rather than the standard arrangement, renters make a much lower upfront payment of just a week’s rent, along with a £49 set-up fee on moving in, plus an annual fee of £17.50 every year thereafter. (We should also point out that these payments are non-refundable.)

Not only that, but more than three-quarters (79%) of the UK’s leading estate agents, including Oakfield, have opted to offer a deposit replacement option. And the scheme is regulated by the Financial Conduct Authority (FCA), the UK’s financial regulatory body.

Who qualifies?

As a tenant, you’ll need to speak to your estate agent about their zero deposit scheme. And you’ll still need to go through referencing, in which the provider will check some details about you, including affordability assessments.

But if you don’t pass referencing, you can ask somebody to act as your guarantor. They will then become liable for any money you owe on your tenancy which you haven’t paid. Guarantors also have to pass referencing checks made by the provider.

Great for landlords

For landlords, zero deposits can work out really well, since there isn’t the paperwork and hassle involved in placing deposits in protection schemes, and there are no fees they have to pay themselves. Zero deposits also speed up how quickly someone can move in to a property, and minimise potentially costly void periods.

Equally, the purpose behind a traditional deposit is security, and landlords still enjoy that under the zero deposit scheme, in the form of protection worth the equivalent of a six-week deposit.

However, it doesn’t mean zero responsibility on the part of tenants, who remain liable for any rent arrears or damages.

Great for renters

For tenants, zero deposits can be ideal if you’re new to the rental market, have a less-than-perfect credit history or if you are a renter who has to move often, e.g. for work. That’s because you’re not having to save up constantly for fresh security deposits. So you avoid situations in which you have to pay a new deposit while still having cash tied up in your last one. Equally, zero deposit works well for those on lower incomes, including students.

What if there’s a dispute?

If there is a dispute, for example over the state of a property at the end of a tenancy, it’s not down to an insurance company to settle the claim. The zero deposit scheme has a partnership with expert adjudicators The Dispute Service, which also runs the UK’s longest-running tenancy deposit protection scheme, as mentioned above.

They will thoroughly review all the evidence involved, before coming to a fair and impartial decision and decide whether the tenant is responsible for any financial loss or damage and, if so, how much money is owed. (Claims are then settled very quickly.)

Oakfield says

At Oakfield Estate Agents, we genuinely believe in zero deposits as an excellent and fair way of getting tenants into homes while protecting landlords’ rights. So we’re pleased to have signed up to this scheme, and have seen it work well across our areas of Hastings, Eastbourne and Bexhill.

We know that, time after time, not having to pay a large upfront deposit has helped renters to secure their new home of choice in a way that simply wouldn’t have been otherwise possible.

Talk to us today about moving in to a rental property using this scheme and bagging your next dream property more easily. Equally, if you’re a landlord, consider offering the scheme for a quick, efficient sign-up process while still being covered to the value of six weeks’ rent for any financial loss or damage your renters cause under their tenancy agreement. Get our contact info here.