Leaders Romans has been investigated by a personal finance website over claims that its ‘no deposit option’ is unfair to tenants.

Daily Mail-owned ThisIsMoney has published the findings after its examination of the agency’s deposit-free renting scheme, which charges tenants a monthly fee in lieu of a full deposit but still chases them for payment if they damage a property or end a tenancy early.

Although the half a dozen schemes in the market claim to be gaining traction, the case highlights how some can cause disputes between letting agents and tenants.

The investigation reveals that a single mum who moved into a property in June last year and who took up Leaders Romans’ no-deposit option then decided to quit the tenancy after seven months because of the property’s poor condition.

Single mum

She was then chased for £1,318 in damages claimed by the landlord which the single mother of three was told she would have to foot despite having paid £537 in ‘no deposit option’ payments to Romans.

The case is typical of the misunderstandings that poor communication between agents and tenants about no deposit schemes can create.

Many tenants assume their payments cover them for damage to a property even though none of the schemes offer this; almost all insure the landlord against any costs, and chase tenants for payment through a variety of different arbitration schemes.

“We have always been concerned about some operators in the market who are structuring the cost to tenants in a disproportionate way, or forcing tenants to take on additional insurances as a prerequisite,” says Daniel Jeczmien (left), co-founder of deposit alternative company Flatfair.

“We believe the costs to the tenant should be proportionate to the benefit, and there needs to be a clear differentiation between insurance-based companies who are charging tenants excessive or recurring fees, and technology firms, like ourselves, where tenants are charged a one-off transparent fee without any hidden costs”.

Read the report in full.