Choosing a ‘zero deposit’ scheme: everything you need to know

November 3rd 2019
By: Lauristons
Choosing a ‘zero deposit’ scheme: everything you need to know

Many tenants can attest to the fact that when moving home, the deposit part can be quite a headache, why? As a new tenant to a particular property, you are usually required to pay the security deposit as well as the first month’s rent all at once. This might be doubled to what you are expected to pay in a month’s rent. Say for instance in London, an average month’s rent is £1,665 but as a new tenant, you may be required to pay up to £3,300+ to cover the rent and security deposit.

There has been recent changes with the Tenant Fee Ban, which caps or limits deposit payments, but it’s still a struggle for many people. This may be why a new and alternative trend has hit the market: zero deposit renting.

From a recent survey of 3,752 adults, 50% + of them said they would be very interested in the housing approach of a zero deposit scheme, whereby the tenant is supposed to pay a non-refundable fee equivalent to one week’s rent to move in, instead of the usual upfront deposits.

However, many landlords have given their feedback to this proposal as well, stating that the scheme needs to be analysed extensively to ensure it is safe and feasible for the tenants as well as the property owners. What are the procedures, risks and regulatory measures which you should be aware of? Read on to find out ...

The scheme                                   

For the landlords that prefer the zero deposit scheme, there are varying models; each with a different way of operating.  

These landlords have been promised great protection and offers, some of which are the following:

  • Payment of one week's non-refundable fees
  • Fewer void periods
  • Quick onboarding of the prospective clients
  • Fewer wrangles and hassles as the tenants move out
  • A coverage that ranges for 6-12 weeks
  • Independent settlement of disputes

Are there risks involved with this scheme?


Landlords will need to be extra cautious when choosing the deposit alternative provider, as well as making sure they fully understand the scheme they are getting themselves into. Since this is a new scheme on the market, there are no established pros and cons records. While many tenants and landlords prefer the new programme to the capped five weeks security deposit, they should realise that there are a lot of potential risks involved with the new plan like: what if the tenants decide to vacate without notice, and leave the property in a mess?

Is it regulated by FCA?           

Yes, most are.

You should check before you sign any deposits that the one you have chosen definitely abides by FCA regulations to protect yourself and your tenant.

The zero deposit scheme could save many a huge hassle especially when moving in a new apartment, and as for the landlords, they can be certain that their properties have less void periods, as this scheme makes it even more affordable for any interested tenants. Simply put, this scheme could have its problems, but as a whole it seems to make both parties (landlords and tenants) more stress free. For more information about the zero desposit scheme, contact us today to advise you further.