New lettings platform ditches deposits and replaces them with ‘pre-agreed damage fee’

A new business specialising in the student lettings market will not require deposits but will instead levy a “pre-agreed damage fee”.

SPCE has launched, claiming that the student rental market is “broken”.

The business raised £280,000 in crowd-funding on Seedrs earlier this year.

Its app is described as making it easy for students to find a room or an entire house to rent, and to improve transparency between a student renter and their landlord.

The London-based start-up has partnerships with Experian and international student exchange business AIESEC.

Experian will be working with SPCE to help students develop a credit rating while at university, placing them in a stronger financial position once they graduate.

SPCE says it already has 50,000 rooms available for rent and 15,000 students pre-registered for the app, plus agreements in place with six universities.

The SPCE system includes property search; pre-validating guarantors; replacing deposits with a pre-agreed damage fee; ratings of both tenants and landlords, based on previous tenancies and available to both; and repairs reporting.

It also ends joint tenancy liability, so students do not have to pay for damage which is not their fault.

In a pre-launch survey of over 2,000 students, 61% of current university students said securing a rental property was one of the most stressful parts of the entire uni experience, with complaints about poor communication with landlords and agents.

Leon Ifayemi, CEO of SPCE, said: “Anyone currently at university or who has graduated in the past will more than likely have their fair share of horror stories about finding, securing and living in rented accommodation.

“And the truth is that many landlords will also have a tale or two to tell about renting properties to students. The launch of SPCE will change all this.

“Not only are we going to make it easy for students to find desirable properties and for landlords to locate new tenants, but we are also going to make communication between both parties throughout the tenancy absolutely effortless.”

We have asked SPCE whether its charge of a “pre-agreed damage fee” instead of a deposit will have to be ditched once the fees ban comes in.

We have also asked whether the company plans to list on Rightmove or Zoopla, and whether it belongs to a redress or ombudsman scheme.

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4 Comments

  1. Naysayer

    Pretty sure you’ll find that is classed as a tenancy fee and will therefore not be allowed.

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  2. praediumagens79

    The fact it is called a ‘pre-agreed damage FEE’ suggests that, after the supremely clearly worded FEE BAN comes in, it won’t be possible to do this, so one assumes its just a short term marketing scheme to mislead student tenants into thinking it is not a DAMAGE DEPOSIT.

    However, if you take money up front from tenants with a view to offsetting potential costs incurred by the Landlord for end of tenancy regarding damage/cleaning, I believe that makes it a DAMAGE DEPOSIT, and so (TDS/DPS will confirm) then falls under The Deregulation Act 2015, so must be registered/deposited with one of the approved scheme as such.

    Pig in a poke, anyone …?

     

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  3. jeremy1960

    If agreement to or payment of the “pre arranged damage” is a condition of granting the tenancy then under the draft legislation for the fee ban it will be banned.

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  4. GlobalSolutionsAgent48

    If you take money for ‘possible’ damages, this is a deposit that should be returned in the event that ‘no damage’ occurs; = Tenancy deposit. Any other reason = a ‘fee’.

    A fee by any other name is STILL a fee! Simples..

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