Deposit-free renting could be the key to turning tenants into homeowners by boosting their chances of a successful mortgage application.
That is according to an affordable housing website which has suggested renters consider an insurance policy as an alternative to the hefty deposit required to secure a private rented home.
In 2017 the average deposit for a rental property was £967, according to the Deposit Protection Scheme.
But one company providing the alternative, Canopy, said it could save tenants up to 95% with its ‘Rent Passport’ which is run in partnership with credit reference agency, Experian.
It means tenants using the scheme will see their credit report improve when they pay their rent on time, which could prove favourable when applying for a mortgage.
Under the insurance scheme the cost of the one-off payment can be paid by a tenant, landlord or letting agent.
Paul Malone (pictured), who runs MovingSoon.co.uk a website which advertises shared ownership properties, said the insurance policies offered benefits to both tenants and landlords.
He said: “Meeting the cost of the policy makes financial sense if the landlord can get a tenant quicker.
“Every week a property stands empty costs an owner money. For the tenant, some schemes track rent payments and that can boost their credit score.
“This is a massive bonus for young people eyeing the property ladder and might be the deciding factor in choosing to go with a private landlord.”
A survey carried out by MovingSoon revealed more than seven in ten prospective tenants registered on its site thought deposit-free renting was a good idea.
