A zero deposit scheme is a method of renting a new home without having to pay a large deposit (currently capped at five weeks’ rent). Instead, tenants are required to pay a non-refundable fee based on a week’s rent only. It is also possible for tenants to split the fee with other tenants if they are sharing the property. In this blog, we will discuss how you can qualify for the zero deposit scheme and the advantages and disadvantages associated with the scheme.
How can you qualify for the zero deposit scheme?
Any tenant can qualify for the zero deposit scheme if they pass the usual referencing checks. This is beneficial for people from lower income backgrounds who cannot afford to pay a larger upfront deposit. However, if you are renting as a company, you will not be eligible for the scheme.
Advantages of the zero deposit scheme:
One of the major benefits of the zero-deposit scheme is that it reduces the amount you must pay initially which saves you money. Furthermore, those from lower income backgrounds benefit from the scheme because it provides a more affordable and less stressful way of securing a tenancy. There are some issues that can arise later, however, as you will eventually need to spend more on modern furniture and setup costs once you move in.
Disadvantages of the zero deposit scheme:
While there are some benefits of the scheme, a disadvantage is that you are still required to pay one weeks’ rent as well as a setup fee and you will not receive this deposit back. Long-term tenants would also be required to pay a yearly admin fee to remain in the zero deposit scheme. The yearly admin fee is different depending on your provide and it may change over time. Additionally, the scheme provider will seek to claim money from any damage to the property.
Watch our zero deposit scheme video here: Zero deposit scheme: advantages and disadvantages – YouTube
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