Tenant "No Deposit" Schemes can leave tenants paying twice.
A recent report in Property Industry Eye warns agents that have been peddling "No Deposit" insurance to tenants to brace themselves for "a crescendo" of claims.
The Property Ombudsman believes that tenants "simply didn't understand they were just being required to pay for the privilege of not paying a deposit". A point often missed is that the tenant still remains fully liable for damages and is pursued by the "No Deposit" scheme company, rather than the landlord.
Sure, with proper, normal tenancy agreements the tenant may lose the £20 to £40 interest they could have earned on a £2,000 deposit over a year, but with some No Deposit premiums as high as one weeks rent (Zero Deposits), that's a cost of £400 the tenant will never get back.
At the time of writing a £2,000 monthly repayment loan with Tesco Bank Loan Calculator is 18.5% APR
All that glitters is not gold!