OpenRent’s New Deposit Policy

Tenant Discussion
1

I just want to issue a warning to all tenants thinking of using OpenRent. Please read the OpenRent terms and conditions carefully especially the Deposit terms and Conditions.

For those tenants who are unaware of deposit rules and regulations, landlords are entitled to request a deposit of maximum 5 weeks rent. This deposit must be registered with an accredited deposit protection service. There are two types of deposit schemes:

CUSTODIAL - The tenant pays the full deposit demanded by the landlord, which is then transferred to a deposit protection agency and held by them. At the end of the tenancy the deposit protection agency will return the deposit to the tenant, including the interest earned while the deposit was in the account.

INSURANCE - Also called a deposit replacement scheme. The tenant pays the deposit protection agency a non-refundable insurance premium, typically one week’s rent, to have the tenancy “insured” against any damages to the property. This is a more attractive option if the tenant cannot afford to pay a full custodial deposit.

OpenRent have surreptitiously changed their deposit scheme from giving the choice of custodial or insurance deposits, to one where they collect the full deposit and keep it in their account. They then take out, on behalf of the tenant, an insurance policy, paying a premium of one week’s rent. At the end of the tenancy they will return the deposit to the tenant, however they will keep the interest earned on the deposit. This is because the deposit is not held in the account of the accredited deposit protection agency, but in their own client account. This deprives the tenant of the interest on the money they have deposited. Whilst they have found a legal loophole, I think this is unethical and definitely NOT IN THE INTEREST OF THE TENANT! THIS SCHEME ONLY BENEFITS OPENRENT!

2

The tenant doesnt get any interest however the deposit is protected, there is no loss to tenant.

You seem to be confusing no deposit schemes where tenant pays a fee of 1 weeks rent rather than a deposit with the 2 ways to protect a deposit paid by tenant, custodial where money is deposited with deposit protection scheme and insured where landlord/letting agent pays an insurance fee (£27) with dps and retains the deposit. Given high interest rates more ll will probably use insurance scheme. The tenant does not lose out, their deposit is fully protected and no interest is lost.

I’d prefer openrent didn’t as adds some complexity but in scheme of things not that big a deal.

3

This also appears to be a duplicate post to the one already made by the OP here, and that has an active discussion:

As such, this post will be closed as a duplicate.