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22 Dec 2017

Pay a little, live a lot with Romans’ No Deposit Option

Author: Michael Cook

With property prices having steadily increased over the past decade, the financial burden placed upon tenants has become a very emotive topic of late. To help ease this pressure, the government have made a number of policy changes to make moving more accessible for everyone.

The large upfront deposit creates a barrier to renting which often impacts life decisions. From delaying moves in order to save up the funds needed to secure a rental property, to having two deposits tied up when moving into another rental property or, struggling to save a deposit to buy their first home (should they wish to do so), tenants face a number of financial challenges.

Having seen the positive steps made by the government, and wanting to ensure the property market is accessible to everyone, we’ve reviewed our own offering to discover how we can help our tenants improve their cash flow. The solution we reached was to offer an alternative to the large, upfront deposit all tenants pay – and so, we are launching a No Deposit Option.

Under this new initiative, tenants can opt to pay a small monthly fee in lieu of a deposit. In return for this, they will get a lot more than just deposit free renting. They can also benefit from other features which are exclusive to Romans’ tenants including; boosted credit rating - all rental payments will count towards their Experian credit score and, lower energy bills thanks to our exclusive energy tracker tariff which ensures tenants are on the cheapest tariff based on their usage.

The tenant will still be liable for any damages to the property at the end of the tenancy and Romans will agree the damage schedule with the tenant. This means that the work will still be carried out quickly, before the next tenancy begins. Giving tenants better cash flow whilst reassuring landlords that their property is protected.  

How will this scheme benefit tenants?

Considering how long it takes many tenants to save up six weeks’ rent, removing the deposit means many can move in quicker and makes moving from one rental to another a whole lot easier. Those who have already placed funds into a deposit scheme find that when moving into other rental accommodation the deposit from their old property is not released in time to be used for the new property - meaning they have double the amount of money tied up! With no deposit, this is no longer a problem.

Michael Cook, Lettings Director at Romans comments: “With reports that 46% of tenants are saving up to buy their own property, we want to help tenants achieve their dream. Despite being the largest regular payment many tenants make, rental payments do not count towards their credit score. So we’ve partnered up with Experian to ensure that rental payments are tracked so tenants don’t need credit cards to prove their reliability.”

To help ease any financial strain, we’ve secured an exclusive energy tracker product. Tenants are guaranteed to be placed on a cheaper rate than all of the Big Six energy suppliers* from the day they move in and, have the added peace of mind that their prices will track the market, freeing up even more funds which can be used to save for a rainy day, buy new furniture or fund a deposit for their first home.

How does this affect landlords?

When piloting the scheme, the most commonly asked questions from landlords were ‘How can there be no deposit?’ and, ‘What if there are damages at the end of the tenancy?’

At the end of the tenancy, Romans will liaise with the tenants to rectify any damages on behalf of the landlord. It’s a win-win for everyone, the landlord’s repairs are taken care of swiftly, and the tenant only pays for what actually needs doing rather than having their money tied up ‘just in case’.

“Landlords have the peace of mind that tenants using this scheme will not only be in a better financial position from day one, but are also individuals who are mindful of their credit rating – reducing the risk of missed or late payments” adds Michael.

Under the traditional deposit option, properties are indemnified for the cost of six weeks’ rent, but with the No Deposit Option, this is increased to up to eight weeks’ rent – that’s 33% more! The check-in and inventory processes remain the same, the only difference being that Romans will liaise with the tenants to resolve the issues – it’s less hassle for our landlords and means that the next tenancy can begin without delay!

This scheme was designed to not only benefit tenants financially but to also offer landlords a new marketing tool, creating a buzz around their property that other agents can’t match.

To find out more about this pioneering product, contact Romans on 01344 985 870

*based on comparison with the Standard Variable Tariffs of npower, SSE, ScottishPower, British Gas, Eon and EDF using a similar payment method. Prices will be compared every month.

No Deposit Option

This option is NOT available to Landlords using Roman’s Letting Only Service

14.1 In certain circumstances prospective Tenants in negotiating for a tenancy of your property may prefer not to provide a security deposit (normally 150% of a month’s rental) to be held by Romans as stakeholder as security for the Tenant’s performance of their obligations under the tenancy agreement.

14.2 Subject to the prospective Tenants having otherwise passed our standard referencing criteria they may rather utilise our “No Deposit Option” (“NDO”) whereby in lieu of providing a cash deposit which Romans would then hold as “Stakeholder” subject to the Deposit Protection Regulations, they will pay to us in addition to the rental a further monthly payment in consideration of which payment Romans will indemnify you, the Landlord for any damage or dilapidations arising under the Tenancy PROVIDED THAT the Limit of indemnity will be a sum equivalent to 200% of one month’s rent under the tenancy.

14.3 Such indemnity will be applied firstly in respect of any claim for damages and dilapidations arising under the Terms and Conditions of the Tenancy Agreement between the Landlord and the Tenant. Any surplus of such indemnity may thereafter be applied to any arrears of rental due

14.4 Where the use of the NDO is agreed, it is a condition of the NDO that you the Landlord will:

14.4.1 Utilise the services of the Independent Inventory Clerks nominated by Romans for the compilation of the Inventory and Schedule of Condition at the commencement of the Tenancy and for the completion of the check out at the end of the Tenancy.

14.4.2 Comply on a timely basis with all the Landlord’s obligations as set out in the Tenancy Agreement between the Landlord and the Tenant.

14.4.3 Permit and reasonably assist Romans to bring a claim (at their cost) against any former Tenant in their name for recovery of the amount of any such indemnity provided to the Landlord.

14.4.4 Agree that in the event of dispute with a former tenant as to the amount of their liability or it defaulting to a formal dispute due to no response from the tenant within the 30 day timeframe that such dispute will be referred to HF Resolution Ltd being the independent third party adjudicator.

14.4.5 Agree that the HF Resolution Ltd adjudication decision will be final and binding on the Landlord with no right to appeal through the No Deposit Option scheme.If the Landlord disagrees with the findings of the adjudication decision they will be required to take the matter to Court. This will involve the Landlord first showing that the adjudication decision was incorrect and then making their claim on any damages / dilapidations. The Landlord will still be required to comply with the findings of the decision while they go through the Court process.

14.4.6 Agrees that HF Resolution Ltd reserve the right to decline a dispute if the matter is deemed to complicated or complex for adjudication and it requires the Courts to resolve matters.

14.5 The Landlord acknowledges that there is NO facility for the Landlord to “opt out “of the NDO, and then to require a cash deposit be provided, in respect of any Tenancy agreed subject to the NDO or any extension or continuation of the contractual Tenancy or any statutory periodic Tenancy or other period of occupation arising after the expiry of the original term.

14.6 I/we as Landlord agree that in letting The Property the Tenant may utilise Romans’ NDO subject to the terms set out above.

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