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Growing numbers of tenants are turning to deposit alternative products as inflation, high rents and interest rate rises make it more attractive to hold on to their money to spend or invest.
Reposit CEO Ben Grech (main picture) says that rising inflation has eaten away at a typical deposit while it remains locked up.
“Many tenants would rather put their money to better use right now such as helping to pay for the rising costs of living,” he tells LandlordZONE.
“With Reposit, tenants are obliged to pay only one week’s rent, giving them the flexibility to either spend the remaining sum – equivalent to four weeks’ rent – or save it and benefit from the interest.”
Landlords get up to eight weeks’ worth of rent as protection against dilapidations and rent arrears.
Recession
Adds Grech: “As we go into a time of recession and higher cost of living, the rent arrears claims are the larger claims, so our offering becomes very compelling for landlords and agents.”
As a result, Reposit reports that more agencies are signing up to offer its deposit alternative product, helping to contribute to an almost 600% growth in sales during the last four years – despite a downturn in tenancy volume across the lettings market. The firm believes this shows how deposit alternative products have become more integrated into the rental market.
Goodlord’s tenancy data reveals that in early August, tenancy volume was at 94% compared with 107% in 2019, illustrating that the lettings market has still not fully recovered to pre-Covid levels. Meanwhile, Reposit sales have grown 596% in that time.
One of the latest letting agencies to sign up is Morfitt Smith in Sheffield where director Paul Batty explains: “We rolled Reposit out to all existing tenancies and it was very well received, a significant number wanted to switch, especially those in long-term tenancies.”
Read more: What are a landlord's duties when taking cash deposits?
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