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TODAY'S OTHER NEWS

BBC asks: Do letting agents mis-sell deposit alternative schemes?

A BBC investigation suggests some agents may be mis-selling deposit alternative schemes.

Tenants are then hit by what the probe says are hidden costs which were not explained to them at the outset.

The BBC story looks at a tenant called Simon who rented through an agent using a deposit alternative.

“The 23-year-old was keen to move out of his family home to live with his partner - but they didn't have enough for the deposit of more than £1,000 to rent in Sussex. Eager to move quickly, the couple decided to rent through an agency which offered a deposit-free option.

“It wasn't until they had already put money down and were going through the paperwork that they realised the monthly fee to rent without a deposit was money they would never get back.

“Simon has been living there for more than a year - and has paid more than £500 in fees so far. He feels the agency did not highlight the fee was non-refundable.”

The story then cites The Property Ombudsman, Katrina Sporle.

She says one of her cases has involved a  tenant was forced to pay an administration fee to switch to a traditional deposit - even though they said they had not understood the terms of the deposit-free option. Others were told they had to use a deposit-free scheme to rent with an agency.

David Cox, chief executive of ARLA Propertymark, says it welcomes anything which helps renters struggling to pay a new deposit before they get their previous one back.

However, he says, it is important tenants understand fees for deposit-free schemes are generally non-refundable.

Almost inevitably, campaign group Generation Rent has criticised agents too.

In the BBC story the organisation says some tenants feel under pressure to accept a deposit-free option in a competitive renting market; with at least eight products on the market, tenants can easily be confused while the group accuses some agents of charging tenants as much as £100 to dispute a damage claim from their landlord - a fee which does not exist for traditional deposits held in a government-backed scheme.

Former ARLA president Peter Savage - now an industry spokesperson for deposit alternative supplier Zero Deposits - responded to the BBC probe by saying: 

“We have been emphasising the importance of Financial Conduct Authority regulation since we launched in 2018. We are deeply concerned that unregulated products can be sold freely and aggressively to tenants and this will lead to more complaints and adverse publicity, damaging the reputation of agents in the process.”

He continues: “We urge agents and landlords to act responsibly and choose to partner with only FCA regulated deposit replacement products, along with their associated protections and safeguards.”

You can see the BBC story here

  • James B

    It’s all clearly stated in the terms when they sign .. or does that not count with rentflakes when in the world of agent bashing ?

  • David Porter

    While some agents might mis-sell, I think a bigger factor is that most tenants don't bother reading what they sign.

  • Rob Bryer

    I’ve avoided zero deposits. I could see the issues coming. It could be a great scheme but you could say the same about PPI. Just watch and wait for the reclaim brigade.

    Billy the Fish

    Totally agree Rob, they love to chase something when they get a whiff and bearing in mind commission is paid per policy sold this has 'miss-sell' written all over it!

     
  • Billy the Fish

    We offered them from AUG-18 but pulled out in DEC-19. As the one we used is insurance based the claims process was painful to say the least.
    Miss a date by a day and that is it, the policy is voided and you are left holding the baby.
    Emphasis it put onto the Tenant updating the policy at renewal or periodic, even S21 past the end date. Of course the tenant has a vested interest in the policy action dates being missed!
    Finally any disputed claims then go via the insurance team, not the zero deposit scheme. When claiming the full 8 week policy amount for a tenancy 3 months rent arrears we had every form of communication with the tenant scrutinised and a fingernail biting 2 month wait with questions flowing right until the last date of the decision (of course if we did not reply in time it would have affected their award).
    With a cash deposit you provide the contract, proof of arrears, copies of arrears letters and then just wait for the payment.
    Think carefully if you want to take the PPI/insurance based risk or prefer tenants with skin in the game...

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