New boss of Martin & Co hits out at deposit replacement schemes, saying they will cost tenants more

The new managing director of Martin & Co has hit out at ‘zero’ tenancy deposit schemes.

Louise Griffiths said she read with disbelief that the Government had taken notice of a select committee’s recommendations “and will encourage further innovation in the deposit free renting sector”.

Griffiths told EYE: “The deposit is not money that an agent keeps. Rather it offers an element of protection to the landlord and a commitment from the tenant.

“Further innovation won’t save tenants’ money – it will cost them.

“Every tenancy will bear a charge, rather than the current system where (in the majority of cases) no dilapidation charge is levied and the tenant recovers their monies in full.

“As managing director of a nationwide agency I educate my business owners on the various zero deposit schemes in the market as no one can afford to lose instructions because another agent can potentially bring more tenants to the table by advertising that they don’t need to pay a deposit.

“Landlords need to have done their due diligence when accepting a tenant with no deposit as some of the schemes only work if the tenant continues to pay a monthly fee in addition to the rent.

“For a tenant who looks after a property well and would receive back their full deposit, these schemes will end up costing them more, a lot more, now that tenancies are lasting longer, literally years longer than was typical a decade ago.

“Surely this goes against what the tenant fee ban legislation is designed to mitigate?”

She went on: “For those tenants who leave properties with significant damages and dilapidations and have no intention of paying, this will result in debt collection agencies all over the country chasing tenants for unpaid charges.

“This will bring the lettings industry into further disrepute in an arena where our reputation is already unjustifiably tarnished.

“Whilst there may be merits in some of the schemes on offer in some local market conditions, a ‘Government approved’ blanket alternative to the traditional deposit is not the right way forward for anyone.”

Griffiths took up her position at Martin & Co in March. She was previously a director at Romans, and before that a director at Hamptons, which she joined from Savills.


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  1. MichaelDay

    Disappointing view from Louise Griffiths but only reiterating statements made previously by her boss Ian Wilson. Not all of the schemes operate on a monthly payment plan and undoubtedly new models will evolve in the weeks and months ahead.

    The industry desperately needs innovation and better ways of doing things.

    I see deposit replacement schemes as a valid alternative to deposits for the following reasons

    The landlord protection is much greater than the limited protection afforded by a deposit

    The concern that unless a tenant has “skin in the game” they will not look after the property simply doesn’t stack. The track record of schemes in terms of claims is the same as deposit schemes and ultimately bad tenants will potentially be unable to obtain product whereas at moment if they trash a property and have deposit for the next, they can move on

    The tenant doesn’t have to tie up unnecessary capital (yes, of course the cost is higher but it is a choice) It provides greater flexibility.

    It will provide greater flexibility for tenants to move on – many are stuck awaiting the return of a deposit which they need for the next property

    There is over £4bn in deposit schemes doing nothing – I am sure the Government would like to see this invested in H2B ISAs or used in the economy

    Once the tenant fee ban is in operation, LL could pay for the deposit cover and therefore offer their properties in the market on a  “move in for nothing” basis

    We now hear every year of £1m plus of deposits being stolen by dishonest agents. Mandatory CMP may help by providing a remedy but it would surely be better to remove the temptation

    If the deposit replacement product is offered as an option (not mandatory) then agents will be able to charge tenants and make a margin on the product

    I don’t think deposits will disappear but I do expect at least 50%+ of tenancies in the next five years to be on a deposit replacement scheme basis.

    We’ll see


    1. Woodentop

      Louise Griffiths is spot on. As for the idea behind deposits it is two fold. One to have at least some recompense for damage/arrears but more importantly as any sensible letting agent can tell you, deposit is a commitment by the tenant to behave. It is their money to loose if they don’t, take that away and you have the old scenario of the tenant behaving … “do I care, I have no real liability”. Just like tenant reference fees helps to weed out time wasters.

      1. GeorgeHammond78

        Spot on Woodentop

        As for Mr Day’s comment; “There is over £4bn in deposit schemes doing nothing – I am sure the Government would like to see this invested in H2B ISAs or used in the economy”, what utter utter tosh! Clearly, has no understanding of how the economy works – what do you think banks use to lend money, then?


  2. Ravvey79

    Well done Louise.  Naming these schemes “Zero” is misleading.  The tenant pays a few hundred quid to move in AND pays for the dilapidations when they vacate – so in effect the tenant has paid twice.  New PPI scandal…..?  I’m worried what happens when it becomes common knowledge that the agent has made a commission selling the tenant a product that has forced them to pay extra/double/more for their dilapidations.

  3. andy halstead

    This is an interesting position for a business leader in lettings to take. The industry desperately needs new products and services that are beneficial to tenants and at the same time, offer earnings opportunities to professional agents. Recently this firm reported that 20 or so of their franchisees will ‘go out of business’ during the coming months. Agents need support, there is no single solution to the challenges ahead. Michael Day is spot on, the future is about tenant choice, giving tenants access to products and services that they want and are willing to pay for, because the products help them. Obviously agents should complete their own due diligence before selecting a partner to deliver such products and services. This is a time to be positive, open minded and explore new opportunities, the alternative is terrifying…….

  4. FUDGE53

    I am guessing that Louise is basing much of her opinion on her previous employers rather flawed product.  A product she no doubt had significant input into the development of.

  5. watchdog13

    Amazing how negative people are about innovation. The immediate assumption that a new product or service has to be bad for the sector could explain why so many do not adapt and therefore will see their business disappear.

    The option of Nil Deposit schemes should be attractive to landlords, tenants and agents. Not having to tie up six weeks of rent for years has to be appealing to tenants, the Nil Deposit payment is a one off for as long as the tenant remains in that property, it is NOT an annual fee. The landlord has a the full security of a deposit and the agent does not have the hassle associated with rent deposits. Yes , the agent generates revenue but as long as the tenant is made aware then it is perfectly legitimate.

    In a competitive market, giving the prospective tenant choice is a significant differentiator .

    Of course agents have the choice to sit on the sidelines and moan or innovate and prosper.

    1. Simonr6608

      “Nil Deposit payment is a one off for as long as the tenant remains in that property, it is NOT an annual fee. The landlord has a the full security of a deposit and the agent does not have the hassle associated with rent deposits”


      Not quite so, the schemes I’ve enquired about require a fee equivalent to 1 weeks rent and then an annual subscription which can vary scheme to scheme. The one thing they all had in common is that the tenant stays liable for any loss incurred by the Landlord so in reality not a great option for either party in my opinion

  6. Woodentop

    Clearly there are two differing opinions. Good because without dialogue innovation would not move forward. However the two camps do appear to be experienced lettings agents who are not sold on new ideas presented by those that have in some cases people believe are more inclined to a financial interest and appear to be championing the tenant, when its the agents duty to the landlord and their assets that needs protecting. Zero tenancy deposit creates a group of tenants that will not qualify, that would be homeless or housed if the landlord wants to take the risk. The latter would be a breach by an agent of best advice? Would agents want to take that risk with their landlords or go those extra miles in workload for free? Is this going to create “I don’t like the look of you, get lost you are not renting my property”. How much will it become compounded if fees and deposits are banned   ….. is it a sleeping molehill?


    The current availability of Zero deposits does not work for all, may have only moved the goal posts sideway but has not solved the problem.

  7. jeremy1960

    As with any insurance, premiums will rise as claims increase. A few years down the line and the insurance policy will cost more than taking a decent delaps deposit at start of tenancy.

    1. Woodentop

      One could be cynical and say they could charge what they liked as that’s your only option and its the tenant who is paying?


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