The Dispute Service and Zero Deposit, the company backed by Zoopla and headed by ex-Zoopla commercial officer Jon Notley, have announced a long-term partnership.

Zero Deposit is set to launch a tenant’s deposit replacement product in the form of insurance – in other words, tenants will be able to buy an insurance policy in lieu of a deposit.

TDS will be providing dispute resolution services.

As part of its partnership with Zero Deposit, TDS has made an investment in the new business and takes a seat on the board.

Steve Harriott, group chief executive of TDS, said: “While deposit protection is the core of TDS’s business through our insured and custodial schemes, we recognise the merits of a different kind of scheme where no deposit is taken and one that addresses the affordability/mobility issues that may arise with deposits.

“Whatever option tenants, landlords and agents choose, we are determined to ensure that claims can be assessed with impartiality and professionalism.

“Our experience of dispute resolution and the robust procedures that we follow make us well placed to support this new direction in tenant deposit replacement.

“We chose to partner with Zero Deposit as it is a credible scheme with a number of agents already committed as launch partners. It has raised a significant sum of money in start-up capital and has the backing of Munich Re as the insurer.

“We feel that Zero Deposit’s ethos mirrors our own: their approach is open and transparent for tenants and provides assurance to landlords that they will be able to claim for any losses.”

Notley said: “To have TDS with us as a launch partner is an incredibly important development.

“The TDS team have unparalleled experience of deposit protection and dispute resolution and their knowledge of the intricacies of the private rental sector gives us a significant edge on our competitors.

“With a company as trusted and respected as TDS providing our adjudication services, tenants, landlords and agents using our new product can be assured that any end of tenancy disputes can be dealt with professionally and fairly.”

Zero Deposit says it will pay the landlord within 48 hours of a disputed claim being accepted by TDS.

The announcement of this strategic partnership with TDS follows the news that Zero Deposit has entered an exclusive, global insurance partnership with Munich Re, agreed a long-term promotional deal with Zoopla and had received the financial backing of leading investors including Jamjar, the venture fund set up by the founders of Innocent drinks, and ex-Countrywide boss Grenville Turner.

Zero Deposit is set to launch this autumn, into a market where there are already several players.

Deposit replacement insurance products involve tenants buying an insurance policy in lieu of a deposit.