The Deposit Protection Service have, quite rightly, issued a warning to students to make sure that their deposits are legally protected , outlining the legal obligations of the government accredited scheme. But there is an alternative for students who do not have access to funds for a deposit whilst, at the same time, widening the scope of potential tenants for landlords by offering them the chance to move in without having to stump up sometimes unaffordable upfront costs
Janie Gaston, General Manager of Paragon Advance Ltd, who provides tenancy services to around 4000 agents, suggests the use of a no deposit insurance policy commenting: “This type of policy allows the tenant to pay a one off fee for an insurance policy rather than pay a deposit which can sometimes put students out of reach of independent living. Should the landlord need to utilise the equivalent to the deposit sum say, in the instance of dilapidations, then they simply claim on the policy”.
It’s not only the upfront costs involved that students could possibly avoid, there are also certain pitfalls when using a government deposit scheme, explains Ms Gaston: “Most students will not be aware that proof has to be given to them that their monies are secure in a scheme, thus allowing unscrupulous landlords to take advantage of a student being in a situation they are unfamiliar with. If a dispute should occur, their deposit could be held for months while arbitration takes place, leaving them hard placed to fund a further deposit if they wish to rent again and causing unnecessary and avoidable stress at a time when they need to be concentrating on their studies.
Taking out an insurance policy insures the landlord for up to one month’s rent for the duration of their occupancy and, if a dispute should arise, mediation would still take place, however, at the same time payment would be made to the landlord with 14 days, subject to the terms and conditions being met. At least this way, the student can look for alternative accommodation and, at the same time, the landlord has funds to make any repairs enabling him to immediately re-let his property”.