City firms bid to replace tenant deposits with insurance passport

A tenant deposits platform backed by two major City firma has launched with the aim of competing with the current cash deposit schemes.

Backed by both Hiscox insurance and credit score provider Experian and accessed via an iPhone app, InsureStreet says it will issue renters with a digital ‘RentPassport’ that validates their profile and then provides them with an instant insurance quote to cover their deposit.

Tenant deposits

Instead of paying a cash deposit, renters make a one-off payment for an insurance policy that covers them for the duration of the rental contract.

InsureStreet claims that in most cases, this insurance premium will be less than a tenth of the cost of a deposit, and that the system will reward good tenant behaviour by offering lower premiums at renewal.

The app is free for agents, landlords and renters to download and use, the company says. But what’s not clear is whether the premiums paid by renters for the insurance will be included in the looming letting fees ban.

The Negotiator asked CEO Tahir Farooqui (pictured, below) about this. He replied that: “We absolutely support the letting fees ban and so do many of the property partners we are engaging with” which would indicate he believes the premiums won’t be included in the ban.

“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.

“And for landlords, because they have access to trusted renter profiles, it takes away the fear and mistrust out of rental transactions,” he adds. “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.

FCA regulation

The London-based start-up, which is regulated by the FCA, is selectively piloting with several agents and property firms including Urban Spaces, Get Living, Quintain, Essential Living, Atlas Residential and Walton & Allen.

“The launch of InsureStreet is an exciting development for the rental market. Its RentPassport will connect tenants with agents or landlords digitally, making the whole rental experience more trusted and flexible,” says Martin McBrearty, head of underwriting partnerships at HISCOX (pictured, right).

Credit scoring

The passports will also enable tenants to make their rental payments count towards their credit score, an idea pioneered by CreditLadder in the UK but now also being offered through the InsureStreet platform via Experian.

“We welcome what Insure street are looking to do in terms of helping tenants improve their credit score, says Sheraz Dar, CEO of Creditladder.co.uk (pictured, left). “We’ve been doing this since last year, and have handled millions of pounds of tenants’ rent since launch.”

Jonathan Westley from Experian says: “Experian is committed to be able to help millions of renters improve their credit score by having rent payments count in their credit record. We believe the new proposition from InsureStreet doesn’t just make renting more affordable, but that it can give people access to more attractive and affordable credit products in general.”