Countrywide brand Hamptons has identified four branches that will trial deposit replacement insurance schemes from this month.
Hamptons will offer tenants a choice of a traditional cash deposit or the Canopy insurance product.
The branches trialling it will be Tower Bridge, Pimlico and Wimbledon in London, plus Cheltenham.
More branches could be brought on board in the New Year.
Jon Pitt, head of lettings at Hamptons, said: “We’ve chosen the end of November to launch as the market will be quieter and allow our teams to be fully trained on the system and process.
“Whilst we have not launched the product, we are speaking with our clients who are keen to be on board for the trial.
“Feedback so far is positive and the trial will only be available to properties which we manage. Those clients we have spoken with like the idea of offering the tenant a choice of deposit or insurance, and believe they could have a competitive advantage in the market and that they may see a positive impact on the rent agreed for their properties.”
Pitt also gave his backing to the recently unveiled Tenant Fees Bill, which will ban tenant fees and cap deposits at six weeks.
He said: “This is in line with our current practices to hold a six-week deposit for the vast majority of our tenancies. In the context of the wider draft Bill, we believe Canopy will strengthen our overall letting and management proposition, and provide tenants with a choice of purchasing insurance or paying a six-week deposit.
“We also believe Canopy will support our existing internal processes and allow us to be more efficient in letting and managing properties, something that is at the forefront of our minds when considering the impact of the proposed tenant fee ban.”
It comes after Canopy, which already has financial backing from Direct Line and Experian, announced new support from property investment firm Round Hill Capital.
Canopy also has backing from serial entrepreneur Vin Murria and insurance provider Hiscox.
The start-up was launched earlier this year by Tahir Farooqui. Instead of paying an upfront deposit, tenants have the option of making a one-off payment for an insurance policy from Hiscox that covers the landlord for up to £30,000 in the same way a deposit would.
Each tenant is given a Rent Passport that looks at personal information such as where they were born, their job, credit report and any sanctions, as well as a negative media check, to determine how much they should pay for the insurance.
The cost of an insurance policy is not recoverable, as a cash deposit would be, but it can be reduced to as low as 5% based on good renter behaviour.