Polling by YouGov has shown that 43% of renters would support a
system of deposit replacement insurance with a small cost rather
than the current system of tenants paying large upfront deposits. A
new report published by the Centre for Policy Studies finds the
average renter loses over £300 per tenancy due to lost
interest and inflation because of participation in the existing
deposit protection schemes. Forcing tenants to pay large up-front
deposits mean many people struggle to...Request free trial
Polling by YouGov has shown that 43% of renters would support a
system of deposit replacement insurance with a small cost rather
than the current system of tenants paying large upfront
deposits.
A new report published by the Centre for Policy Studies finds the
average renter loses over £300 per tenancy due to lost
interest and inflation because of participation in the existing
deposit protection schemes.
Forcing tenants to pay large up-front deposits mean many people
struggle to move between properties. They also lose out on accruing
interest on their money which instead is retained by their landlord
or letting agency, and often face a real struggle to receive their
money back.
In his new report, ‘Down With Deposits: The
Case for Rental Insurance’, Brian Sturgess proposes that the
Government should promote a deposit replacement insurance system as
an alternative, which would allow renters to insure against
potential damage or missed rent payments without having to find a
large up-front deposit, estimated to average around £1,041.
Such insurance schemes, which could easily be developed within the
existing insurance market, would enable renters to retain more of
their own money when moving into a property, enjoy the interest
accruing during their tenancy, and avoid borrowing from friends,
family, or pay-day lenders to gather enough funds for a deposit.
The latter would be especially important for the 31% of private
renters who have less than £100 in the bank.
An insurance-based model would also allow renters to build up a
reputation as a good tenant through a ratings system similar to
no-claims bonuses for motor insurance, while landlords still
received protection against property damage and missed rental
payments.
Crucially, an insurance-based model would significantly improve the
lives of ‘Generation Rent,’ at no cost to the treasury.
The YouGov polling showed that tenants would prefer, by 43% to 41%,
an insurance scheme to the current deposit system.
The polling contained in the report was commissioned by Zero
Deposit, which offers a deposit replacement scheme, but the report
and its recommendations were produced independently by Brian
Sturgess and the CPS, with no external funding.
Robert Colvile, Director of the Centre for Policy Studies,
said:
“This Government have a real opportunity to rectify the damage
done by Labour to the rental market.
“By endorsing an insurance-based model as an alternative to a
rental deposit, the Government would rectify an unfair system which
polling shows is unpopular with hard-pressed tenants.”
Brian Sturgess, author of ‘Down with Deposits’,
said:
"Currently many people are simply unable to enter the rental
market due to the need for a large upfront deposit before they move
in. I was made aware of a solution to this problem due to the
pioneering work of Ajay Jagota at Dlighted who proposed an
insurance solution to replace deposits."
Jon Notley, CEO and Cofounder, Zero Deposit
said:
“Our ground-breaking polling shows 43% of people would prefer
insurance backed deposit replacement products to paying a deposit
(41%).
“I urge the Government to support creating a market in FCA
regulated, insurance backed deposit replacement. It would give
another option to the millions of renters who struggle with a
deposit and make lives easier for Generation Rent.”
‘Down with Deposits: The
Case for Rental Insurance’ is available to download from
the Centre for Policy Studies website.
NOTES TO EDITORS
-
The Centre for Policy
Studies is one of Britain's leading think tanks, and
the home of a new generation of conservative thinking. Our
mission is to widen enterprise, ownership and prosperity.
- Brian Sturgess is Managing Editor and Chief Economist at
World Economics. He is the author of ‘The Kindness of
Strangers’ (2017) and ‘Not Paved with
Gold’ (2014), published by the Centre for Policy
Studies.
- Zero deposits was created with the aim of making the moving
process more affordable. Tenants pay the equivalent of one week’s
rent for a Zero Deposit guarantee, which is non-refundable and
which gives the landlord effectively the same cover as a 6-week
tenancy deposit. Tenants remain fully accountable for any damage
or unpaid rents. If the tenant and landlord do not agree on any
claim, the case is sent to TDS, who review the evidence and
provide a fair adjudication. Zero Deposit pays the landlord
quickly in the event of an approved claim.
- YouGov polling data - to test the theory that many people
would choose insurance over a normal deposit (YouGov/CPS Survey
Results – Sample size 745 GB Adults who privately rent, fieldwork
11-14th June)
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Imagine that, when renting a home, you have the choice
of either paying a deposit to the landlord (usually the
equivalent of 6 weeks’ rent, which would be returned at the
end of the tenancy minus the cost of any damage) or paying
for deposit replacement insurance (usually the equivalent
of 1 week’s rent, where you are still responsible for any
damage at the end of the tenancy, but don’t have to find
the full deposit). Which would you prefer?
|
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To pay a deposit
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41%
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To pay for deposit replacement insurance
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43%
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Don’t know
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16%
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