25 days ago - 3 minute read
Getting a deposit together for your new landlord is possibly one of the worst things about renting. In fact, the financial side of renting, to put it plainly, sucks. Renting a home can make getting on the property ladder (and saving for the mortgage deposit) much harder. Plus, when you’re already renting, you have to fork out for your new landlord’s deposit before you get your previous one back.
Well, at least that used to be the case. Fortunately for renters, traditional upfront deposit payments aren’t the only option anymore. With the rise of zero deposit schemes and lifetime deposits that move with you, it’s possible to rent a property without having to pay a huge lump-sum upfront.
If you’re wondering whether you can rent without a deposit, here’s a summary of your deposit options when renting.
Paying an immediate lump-sum deposit is usually the most common way to rent a property. Most landlords ask for this upfront payment to cover themselves from unpaid rent or property damage. The average tenancy deposit in the UK is around £1,300, but it’s determined based on either five or six weeks’ rent.
Not all landlords make their property eligible for zero deposit schemes and, sometimes, it depends on the letting agent. However, it’s possible to find and rent a ‘zero deposit’ property. With these rentals, you’re still liable as the tenant to pay the landlord for any financial loss at the end of the tenancy. However, you don’t have to fork out a huge lump sum at the start as you do with a traditional deposit.
Instead, most zero deposit schemes ask for a smaller payment upfront as part of your registration, which is usually one weeks’ rent plus an admin fee. Many zero deposit schemes also charge an annual or monthly membership fee. Once you’re registered, there’s usually nothing else you need to pay for regarding the security deposit. You simply keep paying the annual or monthly fees.
While zero deposits negate the need to pay upfront, you’ll still need to fund the full amount you owe at the end of your tenancy for any unpaid rent or damages. When using zero deposit schemes, it’s a good idea to have some savings before you move out, just in case you need to settle any debts. Plus, even though zero deposit schemes can make renting more affordable, remember that you usually don't get any of the fees you’ve paid back at the end of your tenancy.
Unlike zero deposits which are usually targeted at first-time renters, Lifetime Deposits are aimed at people already renting. While they can be used by new renters, they’re designed to help existing tenants move to a new rental. Since moving always requires an upfront payment of some sort, finding the cash when your money is tied up in a previous landlord deposit can be difficult. Instead of having to fund your new deposit upfront, a Lifetime Deposit uses your existing deposit to pay for your new one.
So, how do they work? Firstly, you register for a Lifetime Deposit with the Fronted app, and when it’s time to move (and pay your new landlord), all you need to do is add the details of your existing deposit in-app, and your old deposit will be used to pay for your new one. Any differences are settled with a top-up. If you eventually stop renting and there’s money left in your account (after any landlord deductions), you get it back.
Even though these schemes usually require an upfront payment for new renters, they don’t for existing tenants. Plus, provided your landlord doesn’t hold onto your deposit at the end of the tenancy, you get your money back.
Making an upfront payment isn’t a sustainable option for all renters. At Fronted, we provide a deposit solution that can help make moving easier and more affordable for tenants like you. Learn more about how our Lifetime Deposit Scheme works or get in touch with our friendly team for a chat about whether it’s the right solution for you.
Fronted is a trading name of Fronted Holding Ltd. We are registered in England and Wales (Company No.12278750), registered office address is Studio 403, 203-213 Mare Street, London, E8 3LY. Fronted Loans Ltd (Company No.12307305) is authorised and regulated by the Financial Conduct Authority under a Consumer Credit Licence (FCA No. 933316). Fronted Ltd (Company No.12304059) is authorised and regulated by the Financial Conduct Authority under a Broker Licence (FCA No. 933317).
Fronted Loans Ltd and Fronted Ltd is a wholly owned subsidiary of Fronted Holding Ltd. We are part of the FCA regulatory sandbox - Cohort 6. The regulatory sandbox allows firms to test innovative offerings in a live environment. More information on the FCA's regulatory sandbox can be found here.
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