The UK’s two leading alternative deposit providers have clashed after Zero Deposit referred competitor flatfair to the Advertising Standards (ASA) Authority, claiming that flatfair’s website service claims were misleading and ‘could not be substantiated’.
After a five-month investigation by the ASA, the watchdog’s legal experts have today found in favour of Flatfair, rejecting Zero Deposit’s assertion that its competitor had ‘no contractual obligation… to provide the protection advertised’ to its landlords. This protection includes landlords enjoying protection of up to twelve weeks’ worth of rent and free recovery for any additional sum claimed, a key plank of its service offer.
Flatfair has called Zero Deposit’s claims ‘spurious’ and says the ASA adjudication supports the claims made on its website and that continues to ‘allow estate agents to be a neutral player in deposit negotiations’.
The disputed text
“Beat the deposit cap. Enjoy up to 12 weeks’ worth of protection and free recovery for any additional claims”.
Text lower down the page stated “Keep your property protected. Get up to double the protection of a traditional tenancy deposit and significantly lower the upfront costs for your tenants” and “You get extra protection. Tenancy deposits are now capped at 5 weeks’ rent. Make substantiated end of tenancy charges for up to the value of 12 weeks’ rent through flatfair”.
What Zero Deposit said
The company, which was co-founded by former Zoopla sales chief Jon Notley, claimed that it “understood that there was no contractual obligation on flatflair Ltd to provide the protection advertised”, and challenged whether the claims ‘Keep your property protected’ and ‘Get up to double the protection of a traditional tenancy deposit’ were misleading and could be substantiated.
Flatfair responded at length to the ASA, claiming that although it does not offer a specific contractual obligation to compensate landlords when a tenant failed to pay the rent or damaged the property as per their tenancy agreement, it had done so in 100% of cases where the landlord had complied with their referencing requirements.
The company said it had three dealt with three cases where the referencing terms had not been met but had resolved the issues anyway and either paid the landlord the outstanding sum equivalent to or in excess of 12 weeks’ rent or recovered the debt on their behalf.
“The complainant, Zerodeposit.com, believed that the claims ‘Keep your property protected’ and ‘Get up to double the protection of a traditional tenancy deposit’ were misleading because there was no contractual obligation on flatfair to provide the level of cover stated.
“But we considered that within the context of the ad, there was nothing to imply that ‘protection’ referred to a specific type of product that was backed by contractual obligation.
“We understood that there were conditions to the circumstances in which flatfair would offer to purchase a tenant’s debt from the landlord, including the requirement that the landlord had adhered to the referencing criteria specified by flatfair.
“We noted that those requirements were laid out in the terms and conditions, which landlords were likely to review before agreeing to a tenancy with tenants who subscribed to the flatfair service.
“We noted that flatfair had agreed to purchase tenants’ debt from landlords, at 100% of the value of the debt (up to a maximum of 12 weeks’ rent), in 100% of cases where an Established Charge [or money owed] had gone unpaid by the tenant for two weeks or more, and the landlord had met the referencing requirements.
“We noted that included a number of cases where the Established Charge was equal to, or greater than, 12 weeks’ rent. We considered that was enough to substantiate that flatfair provided “protection” at the level stated in the ad, as landlords were likely to understand it in context.
“We concluded that the claims had been substantiated and were therefore not misleading.”
What does Zero Deposit say?
“We are pleased that the ASA complaints process has highlighted the principal difference between FCA regulated deposit replacement products like the Zero Deposit Guarantee, which offer contractually binding protection to landlords, and unregulated products, which typically do not,” a company spokesperson told The Negotiator.
What does flatfair say?
“Our business was founded through a genuine desire to make renting fairer, more transparent and more accessible and we’re delighted that this complaint has rightly been refuted,” says Flatfair founder and CEO Franz Doerr (left).
“Deposits are a major bugbear for millions of renters, wasting significant time for thousands of agents. Our technology aims to make renting as easy as checking into a hotel and savvy agents are using our platform because they need a quicker process that enables tenants and landlords to communicate fairly, massively reducing conflict and distrust.”