Alternative Deposit Schemes: A Smart Move for Landlords
For generations, traditional deposits have been the standard in the UK rental market, typically amounting to five weeks’ rent. However, a growing number of landlords are embracing Alternative Deposit schemes, a modern solution that offer greater protection to landlords and reduces costs to tenants.
These schemes, also known as deposit replacement products, allow tenants to pay a non-refundable fee to a third-party provider, who then guarantees protection to the landlord. This protection can the equivalent of 10 weeks rent, be careful though some providers only offer 6 weeks cover. While initially met with caution, Alternative Deposits are proving to be beneficial for landlords in several keyways.
The changed being proposed as part of the latest version of the Renters Rights Bill further weakens a landlord’s ability to protect themselves as they will no longer be able to take rent in advance as additional security. An Alternative Deposit Scheme provides greater protection as well as faster and simpler dispute resolution.
Better Protection Than Traditional Deposits From a landlord’s perspective, these schemes still offer peace of mind. If a tenant causes damage or fails to pay rent, the Alternative Deposit provider covers the loss, up to the agreed limit. This system mirrors traditional deposit protection but is typically handled by an insurance-backed scheme, which provides improved protection to the landlord. Centurion offers the equivalent of 10 weeks rent as standard coverage which is double the amount of a standard deposit.
Landlords using such a service, must however check to ensure that the provider is insurance-backed to ensure that they are fully protected if something happens to the service provider. We are aware that there is at least one service provider who is not insurance-backed. As such should claims exceed their available cash they will struggle to payout to landlords, this significantly weakens the benefit to landlords who may be left without protection.
Faster Letting, Fewer Void Periods Properties that offer Alternative Deposits tend to let faster. The reduced financial barrier enables tenants to commit to a property quickly, accelerating the letting process. This is especially useful in fast-moving markets or during quieter rental seasons when empty properties can quickly become costly.
Lower Upfront Costs for Tenants
One of the most immediate benefits is increased demand for your property. Tenants with traditional deposits will often have to find up to 9 weeks (4 weeks for first month and 5 weeks for the deposit) rent before they can commit to the property. This is before
we consider if they are juggling a deposit on a new home while waiting for a refund from the previous one.
Alternative Deposits offer an immediate solution whilst ensuring the landlord interests are protected.
Streamlined Dispute Resolution Alternative Deposit providers will have streamlined processes for handling end-of-tenancy disputes. Instead of engaging with a deposit protection scheme and waiting weeks for outcomes, landlords can often resolve claims quickly through the provider’s dedicated team. This means less admin, less stress, and faster resolution—critical if you need to prepare the property for re-letting.
Final Thoughts Alternative Deposit schemes are not about replacing the concept of protection for landlords—they are about modernising and enhancing it. However, until Centurion entered the market it was a costly alternative for tenants, with initial fees of at least one weeks rent, plus other costs, in addition the coverage for landlords was often less than 10 weeks.
Centurion’s Alternative Deposit Scheme is the latest entrant to the marketplace, and insurance-backed for added peace of mind. Their approach is changing the playing field by offering the equivalent of 10 weeks rent coverage for the landlords and significantly lowering the cost for the service. For example, a £1,400 monthly rental would equate to a first year cost of £120 with Centurion. This is far lower than one weeks rent which would equate to a £320 fee charges by other service providers.
Centurion’s offering also includes the ability for monthly or annual payments, paid either by landlord or tenant, as well as not re-referencing tenants. This all ensures that there are no delays in the tenancy starting. In addition, if there is a claim that exceeds the guarantee, Centurion will include those amounts in their claims against the tenants at no cost to the landlord.
Alternative Deposits are now a mainstream choice for tenants and landlords alike in the evolving UK housing market. With Centurion’s entry into the market place the cost has reduced and landlords’ protection has increased.
More information on Centurion’s offering can be found on their website Centurion, or contact them by email info@centuriontrust.co.uk or phone 0333 3050 536.
Written by Paul Pybus
