Are Deposit Alternatives the Future of Renting?
If you’re keeping up with Myrooms company updates, you know about our new partnership with Reposit. Reposit offers a market leading deposit alternative, benefitting both landlords and tenants. Although you may have seen buzzwords such as ‘deposit free’ and ‘greater financial freedom’, what do we exactly mean by this? This week’s blog aims to give you a further understanding of these words. As well as demonstrate how tenants can benefit from working with Reposit through our rooms to rent in London.
What is a Deposit Alternative?
Traditionally, when entering a new tenancy agreement, the tenant is expected to pay a security deposit. This is returned to them, less deductions, once the agreement has ended and the property is vacated. The sum may range depending on the landlord/agency, but generally this is the equivalent to 5 weeks rent. However a ‘deposit alternative’ does exactly what it says on the tin. Instead of a cash deposit, a sum of around 1/5th of the deposit is paid to Reposit, leaving the tenant with 4/5ths of the money that is normally locked up with a deposit scheme. To give you a concrete example; if your rent in your new accommodation is £800 pcm, then a 5 weeks deposit would be £923. By paying only 20% of that price (£184) with Reposit, you save £739 upfront. Thus drastically reducing the upfront costs of renting!
How does this create ‘greater financial freedom’?
The biggest misconception with traditional deposits is that it’s money that will be repaid (less deductions) when the tenancy ends. However renters are fully aware that when one tenancy ends, another must start with another deposit to be paid. So in truth, that money is never yours to spend until you stop renting. Furthermore, data from the ONS shows that London is home to the highest deposit (£1,855 in 2020). Therefore with Reposit, the fee is significantly lower than that of a cash deposit. Instead of a large sum that gets transferred from one tenancy to the next, it becomes a much lower figure. Helping people who may be unable to pay 1 month’s rent plus a deposit upfront. Additionally, it helps others put the money saved from Reposit into other uses. Moving doesn’t have to be ridiculously expensive, and Myrooms want to help ease the financial stresses.
Are people actually using Reposit?
Turns out that yes they are! Myrooms’ partnership with Reposit launched only last month (August 2021), and figures are promising. In its initial month, roughly 50% of rental applications through our website opted to go with Reposit’s. With factors such as the COVID-19 pandemic largely affecting the way people think about their finances, we’re seeing demand for deposit alternatives. In summer 2021, Forbes conducted a UK survey, assessing how attitudes to money changed over the pandemic. Over two thirds of surveyees agreed that COVID-19 “has made them more careful about money”. Further supported by the data that cash-conscious consumers “have cut nearly £14 billion from their household outgoings since the pandemic hit 12 months ago”. Tenants want savings to fall back on in hard times. Plus through the upfront savings Reposit promises, consumers will have money to put back into the UK’s healing economy. Sounds like a win-win to us.
We hope that we have been able to give you some insight into how our partnership with Reposit works. Also why more and more tenants are turning towards alternatives to cash deposits. Instead of having a large sum of money locked up in a traditional deposit, this becomes drastically reduced with Reposit. Leading to tenants having more financial freedom with money they save. Furthermore with recent events, people are evaluating how they are spending money. And it’s time to go from deposit to Reposit. Naturally, if you have any unanswered questions, the Myrooms and Reposit teams are here to help. So do not hesitate to get in contact with us today.
Pratt, K 2021. Covid-19 Money Worries Force Brits To Chop Expenditure. Forbes Advisor, viewed 9 September 2021, <https://www.forbes.com/uk/advisor/energy/covid-19-money-worries-force-brits-to-chop-expenditure/>
Unknown Author 2020. Rental Deposits now higher than average in five regions of England. Property Reporter, viewed 9 September 2021, <https://www.propertyreporter.co.uk/landlords/rental-deposits-now-higher-than-average-in-five-regions-of-england.html>