A new service has launched into the burgeoning market where traditional tenancy deposits can be substituted.
It joins existing providers Reposit, Dlighted and InsureStreet, while Zero Deposit is to launch later this year.
The flatfair launch is also timely, given the capping of tenants’ deposits announced in the Queen’s Speech.
Flatfair’s proposition is that tenants pay it a ‘flatbond’ – a week’s worth of rent – before the tenancy starts. In return for this, landlords are covered for 12, rather than the usual six, weeks of rent.
As with a normal deposit, the tenant remains liable to pay for any damages costing up to the equivalent of six weeks of rent. The idea is that they are thus incentivised to behave responsibly.
There is also independent resolution of any disputes arising after the end of the tenancy.
Flatfair also streamlines and digitises the entire deposit and flatbond registration process, including any change of sharer, claims and payments.
Letting agents share up to 30% of flatfair’s revenues and can use the platform for free, including where the tenant puts down a normal deposit with one of the authorised schemes.
Flatbond is not an insurance produce, and was developed with the support of the Financial Conduct Authority’s innovation hub.
Instead flatfair itself is insured for debt collection and contract disputes.
Because flatbond is not an insurance product, letting agents would be able to advise on it.
Flatfair has launched ahead of Zero Deposit, a similar scheme which offers landlords six weeks’ protection, which is led by former Zoopla director Jon Notley and has the powerful backing of Zoopla itself.
Flatfair is now in the process of establishing a UK-wide distribution network of partnered letting agents, and says it is shortly to introduce additional products.
These will include free tenant referencing, including Right to Rent; free independent inventory checks; and discounts for tenants on services such as cleaning, repairs, broadband and utilities.
The launch of flatfair also comes after this week’s announcement in the Queen’s Speech that tenants’ deposits are to be capped to one month of rent.
Flatfair has been launched by CEO Franz Doerr, who identified a similar deposit product in the German market where he says alternatives to deposits are well-established.
Doerr said of the UK launch: “We kept all the best elements of the government-regulated deposit schemes and simply changed the payment style, so that agents can easily adopt our solution.”
Tenants must pass referencing first. Agents can then create a flatbond – or offer the traditional deposit – through the flatfair platform, and tenants can pay via their phone.
Agents can also convert existing deposits to flatbonds.
Discounted rates are offered over time for good tenants. Doerr said: “Good tenants are our mates and our mates get mates’ rates.”