A UK startup which claims to have the solution to the contentious issue of tenancy deposits has introduced the concept of tenants’ passports.
InsureStreet, an app backed by serial entrepreneur Vin Murria and insurance provider HISCOX, is pitched as an alternative to the “dead money” of tenancy deposits that would free up £4bn to go into the UK economy by replacing them with trust-based deposit replacement insurance.
Instead of paying an upfront deposit, tenants would make 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 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.
Tahir Farooqui, founder of InsureStreet, told EYE that premiums would be 5%-15% of a typical cash deposit cost but good behaviour would lead to a lower risk premium.
There is also a policy excess of 10% of the deposit value.
Agents, renters and landlords will all be able to rate each other on the app.
Farooqui said: “We believe change comes from within, especially in an industry that has been blighted with mistrust. In championing social mobility, we chose to lead by example and empower our customers to do the same; together we can grow and evolve as positive agents of change.
“Our goal is to make it easier for good tenants to find nice places to live – especially in large cities where rent is inflated beyond their means.
“For landlords, because they have access to trusted renter profiles, it takes away the fear and mistrust out of rental transactions.
“What we are offering is not only a convenient app to set up and access our RentPassport service, but also a ‘Rental Hub’ to connect tenants, landlords and agents with each other and relevant services to improve their overall rental experience.”