When you want to rent an apartment but find the high up-front cost unbearable, no-deposit apartments can provide you with an excellent solution. The zero-deposit scheme in rental businesses is a new thing, but it attracts both tenants and landlords due to the benefits that it offers to all parties on both sides of the fence.
There are currently no-deposit apartments for rent in virtually every major city. No matter where you want to stay, you can always find a property with a no-deposit scheme.
High Upfront in Traditional Rental
Traditionally, when you want to rent a property, there is a high upfront deposit that you have to pay. This deposit is called a security deposit because tenants have to pay it to the landlord to cover or offset any potential damages that occur in the property during the tenancy. This deposit is refundable. Tenants can receive it back, or the remaining cash after deducting costs to cover damages, at the end of the tenancy.
The amount of the security deposit can be worth five or six weeks of tenancy depending on the annual rent of the property. All in all, this amount is generally large and becomes the biggest stumbling block for tenants looking for a property as well as landlords looking for tenants.
The no-deposit scheme replaces the security deposit with insurance. Tenants still need to pay the upfront cost, but it is significantly lower than the traditional security deposit. With a simple calculation, a security deposit is generally worth five or six weeks of rent whereas the upfront payment in the no-deposit scheme is worth only one week of rent.
This upfront payment, however, is not refundable. This payment provides a six-week guarantee to the landlord, though tenants might still be responsible to pay for any damages that occur on the property.
The benefits of using this scheme are obvious. Tenants can avoid the high upfront cost and all the paperwork to submit a security deposit and to get it back. If you have a limited budget or if you are pursuing mobile home loans to get your permanent residence, this scheme can provide a real solution.
The disadvantages, on the other hand, also exist. The one-week rent fee is non-refundable and there is an extra fee to benefit from this scheme, though this fee is generally small. Besides, not everyone is eligible for the no-deposit apartments rental scheme.