A new tenancy deposit replacement product will put money in the pockets of letting agents each time a tenant takes up the option.
Designed to more than replace the loss of income when the fees ban comes in, it is likely to average £250, and in London to be some £350.
The money will be earned through agents offering a range of products, including the deposit replacement product.
The proposition has been developed jointly by referencing and insurance firm Let Alliance and inventory specialist No Letting Go.
Their Nil Deposit Scheme has been in pilot mode since last September.
As with other schemes, incoming tenants are given the choice of paying the normal six-week deposit money, or an insurance produce equal to one week’s rent.
Andy Halstead, of Let Alliance, says that current indications are that 70% of tenants are opting for the insurance solution.
Halstead said the trial has proved “very successful”, particularly in situations where a tenant already has a previous six-week cash deposit tied up with a previous property.
He admits he was initially sceptical about the emerging deposit replacement schemes, but says customer research and feedback from tenants changed his mind.
Halstead – whose son heads up a family lettings agency in Cheshire – said: “We are letting agents ourselves and for me nothing quite replaces the cash deposit in terms of security for landlords and a demonstration of commitment from tenants.
“This meant we needed to develop a scheme that effectively replaced a cash deposit in every way for it to have any chance of getting off the ground.
“We have done exactly that.”
The new proposition includes Nil Deposit, tenant referencing, inventory software, a rent guarantee, and tenants’ liability and contents insurance.
Nick Lyons, founder of No Letting Go, described it as an “unrivalled proposition to letting agents”.
Halstead added: “Let Alliance works exclusively with letting agents and for the last 12 months our mission has been to develop a ‘fit for the future’ proposition that more than replaces fees that will be lost from tenants.
“If there was a silver bullet we would have found it.
“There isn’t, so partners and suppliers to letting agents need to collaborate, innovate and deliver value.
“If our customers thrive, then so do we.”