Deposit alternatives and no deposit schemes reviewed

Why it matters

These products sit outside the deposit protection framework, so the legal comfort of a protected cash deposit does not apply. Landlords need to read the cover and the claims terms before agreeing.

Legal requirements

• A genuine deposit replacement fee is a permitted payment only where the arrangement is structured correctly.
• No deposit products are not protected in a tenancy deposit scheme.
• The tenant remains liable for damage and arrears; the product does not discharge the debt.
• Landlords must not require a tenant to use a particular product as a condition of the tenancy where that creates a prohibited payment.

Common mistakes

• Assuming the product covers everything a cash deposit would.
• Overlooking the claim limit, which is often capped at a number of weeks of rent.
• Missing the claim notification deadline set by the provider.
• Failing to tell the tenant they still owe the money the provider pays out.

Practical guidance

• Offer the tenant a genuine choice between a cash deposit and the alternative.
• Read the cover limits, exclusions and the claim window before signing up.
• Keep the same inventory and check out discipline, because claims still need evidence.
• Compare the claims record and financial backing of providers rather than the marketing.

What the products typically cover

Cover usually extends to damage beyond fair wear and tear, unpaid rent and cleaning, up to a stated multiple of the weekly rent. Exclusions vary and can include gradual deterioration, items not listed in an inventory and claims notified late. The evidential requirements mirror scheme adjudication, so a landlord with a weak inventory gains nothing by switching product. Some providers pursue the tenant afterwards, which affects the relationship at the end of a tenancy.

Deciding whether to offer one

In markets where properties let quickly, a cash deposit remains the simpler and stronger option. Where affordability is a barrier, offering a choice widens the applicant pool without forcing anyone into a product. Keep your own position consistent: same referencing standard, same inventory, same inspections. If you do accept an alternative, note the provider, the policy number and the claim deadline in the tenancy record.