The market for tenants’ deposit replacement schemes is set to become increasingly competitive after Hamptons International was named as one of the first customers of Canopy – which also announced a £1.3m cash injection from insurance company Direct Line.
Rival Zero Deposit, heavily backed by Zoopla, is currently recruiting agents and is expected to launch shortly.
A spokesman for Countrywide, which owns Hamptons, said the Canopy service is currently being tested.
A Countrywide spokesman said: “We are currently trialling the Canopy service. It’s not live at the moment, though, and won’t reach branches and therefore tenants until November.”
Jon Pitt, head of lettings for Hamptons, said: “This is a trial so we really want to understand the appetite from landlords and tenants for this type of product. At this time, we think Canopy’s proposition is aligned to our landlords’ and tenants’ requirements.
“We will review this over the course of the trial. We are always looking at how we can improve our customer journey and review a lot of different services that are new to the market. We haven’t ruled out trialling different companies but at the moment we are focusing on Canopy as the service is ready for the market.”
The Canopy scheme has also attracted property developers and build to rent management companies such as GetLiving and Tipi, and says it is in talks with other agents.
The announcement came as it was also revealed that Canopy, which has been rebranded from its original name InsureStreet, has received £1.3m of financial backing from insurer Direct Line in return for a 15% stake in the new company.
Canopy also has backing from serial entrepreneur Vin Murria, insurance provider Hiscox and credit reference agency Experian.
The startup was launched earlier this year by Tahir Farooqui. Instead of paying an upfront deposit, tenants have the option of making a one-off payment for an insurance policy from Hiscox that covers the landlord for up to £30,000 in the same way a deposit would.
Each renter is given a Rent Passport that lasts for 60 days and looks at personal information such as where they were born, their job, credit report, any sanctions as well as a negative media check, to determine how much they should pay for the insurance.
The cost of an insurance policy is not recoverable, as a cash deposit would be, but it can be reduced to as low as 5% based on good renter behaviour.
Farooqui told EYE that premiums would be 5-15% of a typical cash deposit cost but good behaviour would lead to a lower risk premium.
Agents, renters and landlords will all be able to rate each other on the app.
Farooqui said: “We are excited by this financial investment as it supports the expansion of our business, which aims to improve every aspect of renting for all parties concerned – renters, landlords and estate agents.
“The days of the security deposit are now numbered, and we can now empower renters to become buyers far more quickly because their rent can now count towards their credit history.”