Tenants Insurance Instead of Deposit
Discussion
My tenant is leaving & the people i formerly knew at the letting agents have moved on so I'm shopping around for a new agent
One is offering an insurance scheme instead of taking a deposit from the tenants, that's all new to me
I wonder if anyone has had any real life experience of this from either side
One is offering an insurance scheme instead of taking a deposit from the tenants, that's all new to me
I wonder if anyone has had any real life experience of this from either side
N111BJG said:
My tenant is leaving & the people i formerly knew at the letting agents have moved on so I'm shopping around for a new agent
One is offering an insurance scheme instead of taking a deposit from the tenants, that's all new to me
I wonder if anyone has had any real life experience of this from either side
Sorry, you need to explain this a bit more, is this to cover possible damage done when they leave, who is paying for the insurance?One is offering an insurance scheme instead of taking a deposit from the tenants, that's all new to me
I wonder if anyone has had any real life experience of this from either side
I think my mum (naively) has signed up to something similar, instead of paying a deposit upfront you pay each month for a insurance scheme, but you pay it for the whole length of time you live there, so at some point, you’ll be paying more than the deposit would have been, and of course, you never get any of it back.
It's one of the things agents started doing when they banned random fee charging, to try and make up the lost income. There are possibly advantages for the landlord in that it shifts risk to the insurance company, especially if you might have careless tenants, but I'd probably be more inclined to make sure my own insurance is in good nick and just take the traditional deposit.
Sounds like a really bad idea. Taking a deposit is to try to remind the tenants to take care of your property and to indicate some measure of financial competence- i.e they have at least some money behind them .
Swopping this for insurance which will have many exclusions and excesses indicates the agents don't want to do their job properly and inspect/check/ assess condition of the house, and would then say ' sadly that's not covered by the insurance.
As said, maintain good insurance of your own and ensure a deposit is held
Swopping this for insurance which will have many exclusions and excesses indicates the agents don't want to do their job properly and inspect/check/ assess condition of the house, and would then say ' sadly that's not covered by the insurance.
As said, maintain good insurance of your own and ensure a deposit is held
Have done this for 4 ish years.
Deposits have issues, the deposit schemes in general are rather keen to take a tenants side so even if they grant a payout it will often be with seemingly spurious deductions.
In addition the courts can award up to 3 times deposit as punitive damages should a landlord or agent make an error in certain paperwork. They seem to do this in all cases if given the opportunity.
The risk/ reward does not seem to stack up anymore.
The insurance is not expensive, I think usually about 1 week rent, but it varies. Make sure you understand what is covered one scheme caps payout at 6 weeks arrears!
We also insist the tenants take liability insurance, but they can get that anywhere, it’s included in most tenants contents cover. It was also surprising how many tenants thought my insurance would cover their property if there was a fire or burglary etc.
I would not go back to the old deposits
Deposits have issues, the deposit schemes in general are rather keen to take a tenants side so even if they grant a payout it will often be with seemingly spurious deductions.
In addition the courts can award up to 3 times deposit as punitive damages should a landlord or agent make an error in certain paperwork. They seem to do this in all cases if given the opportunity.
The risk/ reward does not seem to stack up anymore.
The insurance is not expensive, I think usually about 1 week rent, but it varies. Make sure you understand what is covered one scheme caps payout at 6 weeks arrears!
We also insist the tenants take liability insurance, but they can get that anywhere, it’s included in most tenants contents cover. It was also surprising how many tenants thought my insurance would cover their property if there was a fire or burglary etc.
I would not go back to the old deposits
nikaiyo2 said:
We also insist the tenants take liability insurance, but they can get that anywhere, it’s included in most tenants contents cover. It was also surprising how many tenants thought my insurance would cover their property if there was a fire or burglary etc.
Do landlords generally not have insurance that covers a fire? If you have a tenant with £500 to their name who falls asleep with a chip pan and then burns the house to a shell, what happens?Gareth79 said:
Do landlords generally not have insurance that covers a fire? If you have a tenant with £500 to their name who falls asleep with a chip pan and then burns the house to a shell, what happens?
I think the poster means the insurance doesn’t cover the tenant’s belongings in this situation 
nikaiyo2 said:
Have done this for 4 ish years.
Deposits have issues, the deposit schemes in general are rather keen to take a tenants side so even if they grant a payout it will often be with seemingly spurious deductions.
In addition the courts can award up to 3 times deposit as punitive damages should a landlord or agent make an error in certain paperwork. They seem to do this in all cases if given the opportunity.
The risk/ reward does not seem to stack up anymore.
The insurance is not expensive, I think usually about 1 week rent, but it varies. Make sure you understand what is covered one scheme caps payout at 6 weeks arrears!
We also insist the tenants take liability insurance, but they can get that anywhere, it’s included in most tenants contents cover. It was also surprising how many tenants thought my insurance would cover their property if there was a fire or burglary etc.
I would not go back to the old deposits
Thanks, that’s a useful insight Deposits have issues, the deposit schemes in general are rather keen to take a tenants side so even if they grant a payout it will often be with seemingly spurious deductions.
In addition the courts can award up to 3 times deposit as punitive damages should a landlord or agent make an error in certain paperwork. They seem to do this in all cases if given the opportunity.
The risk/ reward does not seem to stack up anymore.
The insurance is not expensive, I think usually about 1 week rent, but it varies. Make sure you understand what is covered one scheme caps payout at 6 weeks arrears!
We also insist the tenants take liability insurance, but they can get that anywhere, it’s included in most tenants contents cover. It was also surprising how many tenants thought my insurance would cover their property if there was a fire or burglary etc.
I would not go back to the old deposits
Gareth79 said:
Do landlords generally not have insurance that covers a fire? If you have a tenant with £500 to their name who falls asleep with a chip pan and then burns the house to a shell, what happens?
Sure yes but the landlords insurance covers the landlords “property” or interest in the case of leasehold. It does not cover the tenants property. So the landlord insurance will re decorate the flat etc, it won’t replace the tenants MacBook, TV and clothes.nikaiyo2 said:
Have done this for 4 ish years.
Deposits have issues, the deposit schemes in general are rather keen to take a tenants side so even if they grant a payout it will often be with seemingly spurious deductions.
In addition the courts can award up to 3 times deposit as punitive damages should a landlord or agent make an error in certain paperwork. They seem to do this in all cases if given the opportunity.
The risk/ reward does not seem to stack up anymore.
The insurance is not expensive, I think usually about 1 week rent, but it varies. Make sure you understand what is covered one scheme caps payout at 6 weeks arrears!
We also insist the tenants take liability insurance, but they can get that anywhere, it’s included in most tenants contents cover. It was also surprising how many tenants thought my insurance would cover their property if there was a fire or burglary etc.
I would not go back to the old deposits
Looked at this a year or two ago and tbh could only see negatives. Where now is the incentive for the tenant to maintain and look after the property and treat it with some respect as a home. We have 2 properties rented and have always used the DPS scheme. One of them is generally short term ( near a UNI) 6 or 12 months, we have had 5 tenants in 4 years, 2 have had deductions made on termination without any problems, one was the entire 2k deposit because of the shocking state it was left in. It also paints a picture of a tenant without a pot to p**s in, so doesn’t bode well for getting future rent inDeposits have issues, the deposit schemes in general are rather keen to take a tenants side so even if they grant a payout it will often be with seemingly spurious deductions.
In addition the courts can award up to 3 times deposit as punitive damages should a landlord or agent make an error in certain paperwork. They seem to do this in all cases if given the opportunity.
The risk/ reward does not seem to stack up anymore.
The insurance is not expensive, I think usually about 1 week rent, but it varies. Make sure you understand what is covered one scheme caps payout at 6 weeks arrears!
We also insist the tenants take liability insurance, but they can get that anywhere, it’s included in most tenants contents cover. It was also surprising how many tenants thought my insurance would cover their property if there was a fire or burglary etc.
I would not go back to the old deposits
e21Keith said:
If my prospective tenant couldn't come up with a deposit, I'd have to assume they'd forfeited the deposit at their previous rental and I therefore wouldn't want to rent the property to them
Just can't see how I'd be happy without a deposit.
Thanks, the more I mull it over, the more my view aligns with yoursJust can't see how I'd be happy without a deposit.
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