Free landlord compliance checklist

Equip yourself with all the knowledge you will need to be a fully compliant and law-abiding landlord. Just fill in your details and we'll send a compliance checklist right to your inbox for FREE!

compliance checklist book artwork

Thank you!

The free download has been sent to your email. Please check your account to ensure you have received it
Oops! Something went wrong while submitting the form.

Free landlord compliance checklist

Equip yourself with all the knowledge you will need to be a fully compliant and law-abiding landlord. Just fill in your details and we'll send a compliance checklist right to your inbox for FREE!

compliance checklist book artwork

Thank you!

The free download has been sent to your email. Please check your account to ensure you have received it
Oops! Something went wrong while submitting the form.
Landlords - Find quality tenants faster than ever before for only £900 flat rate
Enquire Today
August 25, 2022

Deposit Replacement Schemes: A Bitesize Guide

September 30, 2021
Written by
Nureen Kirefu

Looking to rent or let a home? Wondering how deposit replacement schemes could work for you? Read our bitesize guide to find out more.

deposit replacement schemes paperwork

Table of contents

Everyone knows to secure a rental property you need to pay a deposit. But what are deposit replacement schemes and why are they becoming increasingly popular throughout the UK? Here we give you the low down on everything you need to know.

What is it?

So instead of paying the upfront standard deposit, renters will pay a scheme provider a non-refundable fee. This is usually rent worth a couple of weeks. Before signing any contracts however, both landlords and tenants should be aware of the fine print. Depending on the scheme, this fee may not be eligible to pay for damages at the end of the tenancy.

New vs. Old

Deposit replacement schemes have arisen out of the need for flexibility as an alternative to the traditional deposit mode, which often relies on significant upfront costs. This option has grown in popularity given the pandemic, especially to avoid situations where renters are due to pay a deposit for their new home before receiving their former deposit, a predicament known as the deposit ‚ 'double-bubble'.

Landlords: The Benefits

There are numerous pros to opting for a deposit replacement scheme option. The schemes offer the same financial protection to the landlord as a traditional deposit; paying the landlord any monies due if the tenant won't and chasing up the tenant for any due payments.

Deposit replacement schemes also remove the risk of fines for failing to protect that deposit in a DPS scheme. As a landlord, you also risk a fine if you don't return a deposit in time once the tenancy finishes. This way you can avoid the risk of going to court. Scary prospects, we know.

What's the catch?

Some landlords are, naturally, skeptical. They feel the lack of a traditional deposit means tenants will be less inclined towards properly maintaining the property.

Some landlords have expressed the sentiment that: 'If my tenant can't raise a deposit how can I be sure they can pay their rent?!'

Property owners must remember however, that tenants still undergo referencing checks - and that these products can be viewed as cash flow options for tenants that want to manage their money in a way that better suits them and their personal circumstances.

Tenants: The Benefits

Not having to pay a hefty deposit fee is a viable option if your current personal circumstances don't allow for it at the time of purchase, or you simply wish to apply that money elsewhere. Some deposit replacement schemes also offer to cover any damages the tenant makes to the property. This means that, as a tenant, you won't have to pay upfront for damages. You also won't have to worry about not having your deposit returned to you.

The cons for renters

Some schemes will charge an annual renewal fee, with others charging monthly. This means you may end up paying more over time than with a traditional deposit. Be sure to read over the fine print for any extra costs. You don't want to end up feeling misled, as in some cases reported by the BBC.

Commenting on the setup, Sean Hooker, Head of Redress at The Property Redress has stated: 'At the Property Redress Scheme, we have unfortunately witnessed many cases of landlords and tenants being mis-sold products within the private rented sector. It is therefore incredibly important that any tenant or landlord signing up for a deposit replacement scheme does their research to ensure that there are no hidden costs, clauses, or surprises in store further down the line. These alternatives only work successfully if all parties understand the purpose and workings of the scheme.Agents should make sure that tenants are fully informed of all the pros and cons of both traditional deposits and alternative deposit replacement schemes before asking their tenants and landlords to decide what option works best for them. This will ensure that they are fully aware of any potential costs that could crop up at a later stage.'

Read that print!

The debate on whether or not the scheme is beneficial in terms of affordability has also been well documented by Eddie Hooker, CEO of the Hamilton Fraser Group, some of whose in-depth research can be found here.

As with everything, there is nothing wrong with opting for a deposit replacement scheme, as long as you ensure it has been designed correctly. The terms should be transparent, with no room for ambiguity. In a continual landscape of changing financial requirements, it's a great option to those looking for an alternative route to renting costs.

About Us

We hope this guide has been useful in covering everything you need to know, whether you're a guarantor, landlord, or tenant looking to rent. At Oasis, we let and manage your property for you so you can avoid the hassle. Find out more about what we offer or contact our team today.

November 24, 2022
November 24, 2022
Block Management Explained

In this Oasis Living guide, we delve into all things block management, and how it differs from property management!

Read More
November 24, 2022
November 24, 2022
Man with a Van: Moving House in London

Need a reliable moving company in London? We've done the legwork for you and have put together this guide to the top moving companies in London.

Read More
November 4, 2022
November 4, 2022
A Landlord's Guide to Anti Social Behaviour

Anti Social Behaviour - Read our guide for landlords all about how to prevent, tackle and report anti social behaviour!

Read More
October 6, 2022
October 6, 2022
Energy Prices in The UK: How to Reduce Costs

Energy prices are a hot topic at the moment, but fear not, we're here to help! We've written this guide to outline some of the ways you can cut costs.

Read More
a block of flats in London which is managed
November 24, 2022
November 24, 2022
Block Management Explained

In this Oasis Living guide, we delve into all things block management, and how it differs from property management!

October 28, 2022
October 28, 2022
Best Places to Invest In Property in the UK: 2022 guide

In this guide, we examine the main factors that buyers should take into account when determining the best places to invest in UK property.

Read More
September 6, 2022
September 6, 2022
Section 21 Notice: A Landlord Guide

A detailed guide for landlords about the upcoming changes to Section 21 notices: what are they, and why is the law changing?

Read More
September 7, 2022
September 7, 2022
Voted The Best Place To Live In London

Voted The Best Place to Live in London, Crystal Palace has a lot to live up to! In this guide we look into the history, the houses, and the local pubs.

Read More
August 12, 2022
August 12, 2022
How Important is a Property Floorplan

Technically speaking, a floor plan isn't required, but do you notice many listings without them? We explain why they're so important.

Read More
a moving company in london in action
November 24, 2022
November 24, 2022
Man with a Van: Moving House in London

Need a reliable moving company in London? We've done the legwork for you and have put together this guide to the top moving companies in London.

August 4, 2022
August 4, 2022
How To Find Good Tenants

What exactly is a good tenant, and how do you find one for your property? This helpful guide explains how to find ideal tenants for your rental home!

Read More
August 4, 2022
August 4, 2022
Things To Do In London August 2022

Looking for fun things to do in London this summer? This is the ultimate guide to fun things to do in the capital this August.

Read More
May 19, 2022
May 19, 2022
Average Rent in the UK in 2022

A detailed look into the current average rent prices across the UK. Broken down into regions and compared to 2021 rent prices!

Read More
May 10, 2022
May 10, 2022
Best Places to Live in London

A complete and comprehensive guide to the best places to live in London for families and young professionals.

Read More
a tenant covers their ears to block out loud noise
November 4, 2022
November 4, 2022
A Landlord's Guide to Anti Social Behaviour

Anti Social Behaviour - Read our guide for landlords all about how to prevent, tackle and report anti social behaviour!