How to rent a house without paying a deposit


Small house with rental label

No Deposit Rentals: Myth or Real Deal?

Fake news is all around us, and those who complain about it often add the warning: “If something sounds too good to be true, it probably is.”  That’s why, when a colleague recently told me she had rented a flat in London without paying a deposit, I cynically asked her if she’d also spotted any unicorns or magic money trees?

 She wasn’t at all amused, and in an attempt to prove her point, she showed me the online brochure for an apartment she had just rented. Her last home was a flat on the third floor of a rather tired, 1980s low rise block in Croydon, but the brochure showed a smart new apartment in trendy Balham, just seven minutes’ walk from the tube.

 Still unconvinced, my next move was to google “no deposit rentals” to find out whether it is actually possible to rent without a deposit. When the search engine returned almost 25 million results, I had to acknowledge that deposit-free renting is a reality.

 My search identified a number of different no deposit schemes for tenants, but as my friend had rented her property with a “Zero Deposit™ Guarantee”, I visited Zero Deposit’s website to check out their offer.  Here’s what I found:

Instead of raising a deposit that usually amounts to five or six weeks’ rent, applicants pay a non-returnable fee based on one week’s rent to move into a new home.

  •       If tenants stay on at the property they have rented for over a year, they will pay a non-returnable annual admin fee of £26 per year.
  •       At the end of the tenancy, if there is no unpaid rent or damage to the property, the tenant will simply move out with nothing to pay.
  •       If the tenant owes rent or has caused damage to the property, they must pay the landlord direct.  If they don’t pay, a debt collection agency may be engaged (which can affect the tenant’s credit rating). 
  •       If a dispute arises between the tenant and landlord, it will be handled by The Dispute Service (TDS), a government-backed, independent body set up to decide claims.
  •       Zero Deposit is regulated by the Financial Conduct Authority (FCA) and the Prudential Regulation Authority, so there are safeguards in place to protect both tenants and landlords.

 The big advantage for tenants comes from not having to raise money for a substantial deposit on top of all the other costs associated with moving house, but there are risks for those who don’t keep enough money in reserve to cover end-of-tenancy claims.  This is something my colleague – a regular earner but not a great saver – will have to bear in mind when she eventually plans to leave her Balham flat.

Another benefit is the ability to move quickly, without having to wait for a previous rental deposit to clear. In this way, an alternative to a deposit rental allows tenants to act fast to secure a property that they might otherwise miss out on.

Deposit free renting may not be right for everyone, but it has certainly worked well for my colleague. Replacing the deposit payment with a less costly, one-off fee has not only fast tracked her into a more popular area, it has also released essential funds to pay for furniture and home accessories.

Now I’ve had the opportunity to review no deposit renting, I’ve begun to regret my cynical response to my colleague’s home move news. It seems that I owe her an apology and – if she forgives me enough to ask me round to her new apartment – I probably owe her a housewarming present.





About Editorial Team 74 Articles
Watch My Wallet has everything you need to know about money, written by real people who’ve been there. Inspired by the philosophy of Early Retirement Extreme (ERE), our goal is to make informed decisions about our finances in order to achieve financial independence.

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