This is Money, part of the Daily Mail, has criticised Leaders Romans Group for the ‘no deposit option’ scheme it introduced last year, after a single mother was left with a £1,318 bill at the end of her tenancy.
According to This is Money, tenants pay a ‘small monthly fee’ instead of an upfront deposit.
However, says the publication: “This fee does not protect the tenant from future claims, and instead goes straight into the agents’ pocket.
“This means that once the tenancy ends, Leaders then comes knocking for any claims the landlord might have – under the threat of court action”.
However, Leaders Romans Group told EYE that tenants were made aware that the scheme is not an insurance policy.
This is Money cites the case of Claire, a single mother of three, who took the no deposit option when starting a new tenancy last June.
She paid a monthly fee of £76.80 for the option.
However, she claims there were faults with the condition of the property – including a shower leak – and she decided to end the tenancy early.
In total she had paid £537.60 over seven months for the no deposit option.
After she left, she was told that the landlord was claiming £1,318, including for redecoration of the hallway after damage from the shower leak.
Eight days later, she was sent a complete summary of the charges and given until 5pm that day to pay up, or face arbitration at a further £120.
Leaders Romans Group has said that it was clear that Claire was disputing the claim, and the property manager wanted to move the case quickly to adjudication.
However, it said: “In hindsight we moved too early. However we waived the £120 adjudication fee entirely.”
Arbitration is set to go ahead, but Claire said that she is concerned her evidence must be submitted through Leaders before it reaches the independent arbitrator.
Hannah Slater of Generation Rent said: “Claire is not the only tenant in this position.
“Deposit alternatives are tempting because they reduce the upfront cost of moving, but tenants should read the small print very carefully to understand their liabilities, the claims dispute process, and whether the letting agent is getting a commission if they sign up.
“Some products are better than others but those which charge a monthly fee rather than a one-off or annual fee quickly end up being very expensive.”
Michael Cook, national lettings director for Leaders Romans Group, told EYE: “We sympathise with Claire over the issues she encountered with her tenancy of the house in Haywards Heath.
“We worked closely with her, and hard on her behalf, to try to resolve the issues she had.
“The role of Leaders as the letting agent is to liaise between the landlord and tenant. We are only able to advise both parties and act on their decisions.
“In order to ensure all tenants are clear on the terms of the no deposit option, the first line in our tenant terms (signed by Claire) reads: ‘You should read this document carefully and thoroughly.
“‘NOTICE: The No Deposit Option is not an insurance policy and the NDO does not cover any liability you as a tenant may have to your landlord for unpaid rent, damage to the rented property and/or other breaches of your tenancy for which you will remain fully liable.’”
Cook continued: “In addition, all of the paperwork we provide makes it clear that our tenants are not tied into a contract, it is their choice, and that they can move back to a traditional deposit at any point.
“All of the properties Leaders offer for let can be secured with a traditional deposit.
“A couple of weeks after the property was secured for Claire she included the following query in an email to us: ‘Also is it too late to consider the ‘no deposit’ option you offer. I have been reading the blurb on it as quite like the idea apart from the obvious reducing my costs upfront.’”
Daniel Jeczmien, co-founder of deposit replacement scheme flatair, said: “We believe the costs to the tenant should be proportionate to the benefit, and there needs to be a clear differentiation between companies who are charging tenants excessive or recurring fees, and technology firms like ourselves where tenants are charged a one-off transparent fee.”