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Deposit Replacement Schemes - Our Guide

01 May 2019

Deposit Replacement Schemes - Our Guide
If you are planning on moving into rented accommodation, then you might be concerned with the large deposit you have to find up front.

This can often be a massive stumbling block for people looking to rent as you may often be required to put down deposits as large as £2000 when renting a property. But there has recently been a surge in deposit replacement schemes that could mean you can move out without putting down a deposit at all. This might come as a relief to many who often struggle without the money tied up in their deposit. But it might not be better in the long run, which is why we have come up with our guide to deposit replacement schemes.

What is a Deposit Replacement Scheme?

You might have heard about deposit replacement schemes before but don’t really have any idea of what the scheme actually entails. The scheme offers an alternative to the traditional deposit paid when renting a property with a replacement scheme that often involves a much lower cost up front and allows you to keep hold of your money. This often involves the tenant putting down several weeks’ worth of rent up front and an insurance policy of some form to cover the landlord. One of the good benefits of this type of scheme is that the landlord covers the cost of the insurance policy.

Different Types of Schemes

One thing that you should be aware of is that there are in fact a number of different deposit replacement schemes that offer different benefits. But they also have different terms and conditions too so make sure you check these out carefully. We have put together a guide to some of the most popular schemes so you can see how they differ;

  • Dlighted – this popular scheme costs £129 to the letting agent or landlord and provides them with insurance. Any unsettled disputes at the end of the tenancy will be reviewed and the tenant will be liable for damages in a successful claim.
  • Zero Deposit Scheme – similar to the above scheme but the tenant has the insurance policy. This means that any unsettled disputes will be paid by the scheme but you should check all conditions as you might still be liable for costs.
  • Reposit – this is more like a warranty and the tenant pays a one-off fee that is non-refundable. Similar to car insurance this fee reduces over your renting life with no claims bonuses but you are still liable for costs should there be a dispute.


Is a Deposit Replacement Scheme Worthwhile?

If you are wondering whether or not a deposit replacement scheme is worthwhile then you should make sure you consider all aspects of the scheme first. Although it will cost you much less up front, it can actually end up costing you much more in the long term. With a traditional deposit, this will be returned to you at the end of the renting period. This means you will get all of this money back assuming there are no damages that need to be repaired by the landlord. If you opt for a deposit replacement scheme then you will still be liable for costs on a successful claim, which can be expensive if you don’t have any savings.


You should consider all of the aspects of a deposit replacement scheme to make sure that you know what you will be left liable for at the end of the scheme. If you don’t have the money for a large deposit on a property, then you should consider a scheme. However, it can be much cheaper and easier, in the long run, to opt for a traditional deposit scheme.