"A thriving PRS is vital to ensure more tenants have an affordable, safe and comfortable home so landlords must be encouraged to stay in the sector."
PR: How did you get into property and what's your current role?
I started an apprenticeship as a sales negotiator in Preston after I left college aged 18. I spent three years in estate agency, mainly within sales, and found the fast-paced nature a lot of fun. I enjoyed being part of the negotiations between vendors and buyers, as well as visiting some great properties. One memorable deal was selling my former teacher’s house above the asking price! I decided to follow my university ambitions and after completing a Masters, I joined Reposit in 2019 where I’m now the sales team lead. Gaining a good knowledge of how landlords operate and relevant lettings processes have served me well because I can directly relate to agents and understand how they’re looking to streamline their businesses with the very best proptech innovations.
I manage the new business side of Reposit and in just five years, I’ve seen deposit alternatives go from being relatively unknown and misunderstood to valued products, often helping to drive growth for our agent customers. It’s been exciting to be part of this rapid change as we continue to gain ground with agents, landlords, tenants and BTR operators.
PR: With rents higher than ever and the value of arrears rising, how can landlords protect themselves?
The last few years have been particularly tough for landlords. They’ve experienced interest rate rises, compliance demands around energy efficiencies as well as a general rise in costs and now there are concerns about an increase in CGT at the next Budget. They’ve been heavily impacted by the cost of living crisis, making the sector more unpredictable and more expensive to operate within. At the same time tenants have also experienced a rise in costs which has left landlords exposed to arrears. Our data shows that average arrears claims increased to £2,092 in Q2 24 - a rise of 15% from Q1 which highlights the need for protection for landlords against accumulative debts. Further figures show that a five week cash deposit is no longer enough in 17% of tenancies and this has grown from last year when the same figure was 14%. This inefficiency is why we’re seeing a rising number of landlords offer a deposit alternative, with our product providing eight weeks of cover, compared to the usual five.
Although 28 days is the quoted time for a resolution within the cash schemes, we often hear it’s longer. With Reposit, the dispute service is 14 days and is led by an independent adjudicator. We think keeping this timeframe to a minimum is important for all parties, especially landlords if they are owed funds. We also believe it’s vital that a tenant’s financial capacity to pay the monthly rental cost in full is assessed by quality referencing and affordability checks carried out by specialist providers. We insist tenants pass a credit history check, identity verification and an affordability check to show their salary is at least 30 times the monthly rent.
PR: What's the Government's advice to tenants when choosing a deposit scheme?
The Government’s latest How to Rent guide which was published last year explains that tenants may be offered deposit replacement products as an alternative to a cash deposit but the choice of which avenue to take remains in the hands of the tenant. The guide stresses the importance for tenants to check if the product they are offered is FCA-regulated. This is because the FCA sets high standards to ensure consumers are protected. FCA-authorised firms are subject to rigorous reporting and transparency requirements, providing consumers with clear information about their products and services, and helping to maintain fair and transparent market practices.
Reposit meets this criteria and follows strict guidelines as set out by the FCA which intend to bring agents, landlords and tenants peace of mind that they are working and affiliated with a compliant and responsible firm.
PR: What are the biggest misconceptions around deposit alternative products?
There’s a myth that tenants who can produce a five week cash deposit are more financially reliable than those who would prefer not to commit this large amount of money, however this is not the case. Our survey commissioned earlier this year showed almost 40% of tenants were borrowing money for their cash deposit, meaning that a tenant’s capability of producing a lump sum cannot reliably indicate whether or not they are financially stable which is why we believe this is best done by best-in-class referencing and affordability checks.
The second biggest misconception is that cash deposits are free for tenants and are therefore a better option but locking up a substantial amount of cash for a long period is never ‘free’ and given the average rent in the UK is now £1,166, this makes the average five week deposit around £1,345. With a cash deposit, the tenant has no access to this money, meaning it cannot earn interest, nor is it being put to better use right now. With savings accounts now offering around 4% interest, tenants are potentially missing out on good annual returns. With Reposit, tenants are obliged to pay one week’s rent (as a non-refundable fee), giving them the flexibility to either spend the remaining sum – equivalent to four weeks rent – or save it and benefit from the interest. We know 55% put the money towards their moving costs such as buying furniture which shows how deposit alternative products offer tenants financial breathing space for necessary purchases.
PR: What are the challenges in the PRS right now and how can they be overcome?
In a survey earlier this year by the Property Redress Scheme, 66% of landlords indicated that legislation was the biggest challenge they faced - a sharp increase compared to the 2022 survey when it was a top concern for just 39%. While the intention behind the legislation has been to raise standards in the PRS, some of it has come at a cost to landlords, many of whom now report feeling overburdened.
A thriving PRS is vital to ensure more tenants have an affordable, safe and comfortable home so landlords must be encouraged to stay in the sector. If they choose to sell, the lack of supply is exacerbated and rents will increase off the back of heightened demand. Building new homes, including those for rent, are also key to tackling the current challenges.
