Deposit replacements on the rise: what are they and how do they work?

With the cost-of-living crisis, deposit replacement options are on the rise, but what are they and how do they work?

Ome - Deposit replacements for Build to Rent landlords | BTR News

Deposit replacement options are simply an alternative to the traditional upfront deposit. They remove the need to pay the traditional upfront cost of the first week’s rent and rental deposit when moving into a rental property, by replacing this with a more manageable monthly subscription.

By Ome

There are different types of deposit replacement schemes on offer, those offered by letting agents themselves, and those offered by independent companies, like Ome.

With the cost-of-living crisis, deposit replacement options are becoming more and more popular, so here we explain the differences between traditional deposits and replacements and highlight the benefits of offering choice to your tenants.

What is the difference between traditional deposits and deposit replacements?

Traditional deposit schemes require the tenant to pay a substantial upfront sum to their landlord or agent, which is usually refundable, but can be deducted from if the tenancy agreement is breached.

Legally, traditional deposits must be protected by the landlord or agent in a deposit protection scheme, like government authorised mydeposits, within 30 days.

Deposit replacement options, meanwhile, remove the tenant’s need to provide a one-off upfront cash deposit. Instead, the tenant purchases a deposit replacement for a non-refundable fee and pays in smaller, more affordable monthly instalments. For many tenants, the removal of an upfront deposit is beneficial for managing cash flow, especially in the current financial climate.

What are the benefits of offering a deposit replacement?

  • Save on administration by not having to serve the prescribed information that is needed when you protect a traditional deposit.
  • Appeal to a broader pool of tenants that are actively looking for flexible financial solution.
  • It is free for landlords and agents to offer it to their tenants.

Why choose Ome’s Deposit Replacement Membership?

Ome is the only deposit replacement on the market built by deposit experts, with over 25 years of experience within the private rental sector.

Offers choice to your tenants

A happy tenant makes a happy landlord. Give your tenants the option to choose a flexible, monthly subscription over the course of the tenancy instead of the traditional cash deposit. If your tenants choose Ome’s Deposit Replacement Membership, you will be protected for up to five weeks of rent value.

Ome will collect the subscription payments each month and, if you require their resolution services, they will directly pay the landlord the awarded settlement amount and take responsibility for collecting it from the tenant.

Competitive prices with easy payment terms

Ome provides landlords with a quick end of tenancy process, and the exact same protection as a traditional cash deposit, allowing tenants to move in for as little as £5 per month (with a £30 set up fee) and reducing the high upfront costs of moving into a new home.

For more information, read our guide on everything you need to know on deposit replacements, contact the team on hello@omehq.com or call 0345 634 5402.

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