What Exactly are Zero Deposit Schemes?
A zero deposit scheme lets a tenant move in without paying a cash deposit. Instead, the tenant pays a provider a smaller fee they don't get back, and the landlord gets cover from that provider in place of the cash. The tenant still owes for any damage or rent arrears they're responsible for.
The rules here are England's unless a section says otherwise. Wales and Scotland have different rules, and this page doesn't cover Northern Ireland.
Article updated: October 2026
What is a Zero Deposit Scheme?
A zero deposit scheme is a paid alternative to a cash deposit. The tenant buys a product from a provider, and that product gives the landlord some protection if the tenant leaves owing money.
You'll also see it called a no deposit scheme, a no deposit option or deposit replacement. They're all names for the same basic deal. So when a letting agent asks if you want the no deposit option, they're asking whether you'd rather pay a fee you won't get back than hand over a deposit you'd normally get back.
Zero Deposit Guarantee is the name of one firm's product, not a general term. Zero Deposit describes it as a contract of insurance that covers the tenant's liabilities if they don't pay a claim. The name doesn't mean the landlord gets paid whatever happens, and the tenant still owes the money.
Products such as Reposit and flatfair are built differently. Some are insurance and some aren't, so "deposit replacement insurance", another name you'll see, only fits some of them.
Traditional Security Deposits
A security deposit is cash the tenant pays at the start, held against damage or unpaid rent at the end. In England, the government's fees guidance says a landlord doesn't have to take one at all.
Where a landlord does take one, the government's guidance for tenants sets the Tenant Fees Act ceiling. It's five weeks' rent where the annual rent is below £50,000, and six weeks' rent where it's between £50,000 and £100,000. The same guidance caps a holding deposit, paid to reserve a home, at one week's rent. Above £100,000 a year, the fees guidance says the Act doesn't apply.
From 1 May 2026, the Renters' Rights Act changed the rules on rent in advance, not the deposit caps. The government's rent in advance guidance says a landlord can't ask for or accept rent until everyone has signed the tenancy agreement. Between signing and the tenancy starting, the limit is the first month's rent, or the first 28 days' rent where rent is paid more often. Agreements signed, or rent paid in advance, before 1 May 2026 aren't covered. From the same date, the government's overview says a new tenancy with a private landlord is an assured periodic tenancy, which runs on a rolling basis with no end date.
The government's deposit protection guidance says a cash deposit on an assured periodic tenancy must go into an approved scheme within 30 days of getting it. A holding deposit doesn't need protecting until it becomes the deposit. The same guidance lists three schemes for England and Wales: the Deposit Protection Service, mydeposits and the Tenancy Deposit Scheme. In a custodial scheme, the scheme holds the money. In an insured scheme, the landlord or agent keeps it and pays the scheme to insure it.
How a Zero Deposit Scheme is Different
With a zero deposit scheme, no cash is held for the tenant at all. The tenant pays a fee to the provider, and the provider keeps it. The government's protection rules are written for a deposit of money, so there's nothing for a deposit scheme to protect and nothing to hand back at the end.
What the landlord gets in return depends on the product. Zero Deposit's agent FAQ says its insurance is provided by Great Lakes Insurance SE. With Reposit, the landlord becomes a named beneficiary on an insurance policy covering the tenancy, though Reposit's tenant page says plainly that Reposit isn't tenant insurance.
flatfair works differently again. It describes itself as discretionary, judging each case on its merits. Its terms for letting agents bar them from advertising the service as insurance or as a contractual guarantee of payment. So "the landlord is covered" can mean an insurance claim, or a firm's own decision on the case.
How does a Zero Deposit Scheme work for Tenants
For tenants, a zero deposit scheme means less cash to move in, in exchange for a fee that doesn't come back. Everything you'd owe under the tenancy, you still owe.
Deposit Free Renting
The draw is the upfront saving. On a £1,500-a-month let, one week's rent is £346.15 and a five-week deposit is £1,730.77. Even flatfair's £504 leaves more than £1,200 of that in your pocket on moving day.
It also helps when moves overlap. You aren't waiting on the deposit from your last home to pay for the next one, as long as the landlord offers a replacement product.
The provider runs its own checks on top of the landlord's referencing. Zero Deposit says a tenant has to pass referencing for their share of the rent, or have a guarantor who does. Reposit has its own eligibility criteria.
In Wales, the Welsh Government's deposit guidance points tenants who can't afford a deposit to their council, which may run what it calls rent or deposit guarantee schemes. Those are separate from commercial products, with local rules.
Extra Costs
The fee is a cost, not a deposit, so you don't get it back at the end of the tenancy. That holds even if you leave the place spotless. Zero Deposit says its upfront fee is non-refundable and isn't offset against any claim. Reposit says its fee can't be offset against costs at the end of the tenancy either.
Refunds depend on the provider. Zero Deposit says you can cancel within the 14-day cooling-off period after buying, subject to its terms. Reposit refunds the fee in full if the tenancy is cancelled before it begins, while the start date of your Reposit is still ahead. Once a Reposit is complete and has started, Reposit refunds the fee in full if it's told within the first month, subject to its other conditions. On a shared tenancy where not everyone paid, the tenants who did can get a refund even after the start date. Any cancellation needs the landlord or letting agent to confirm it.
Some products charge again later. Zero Deposit adds £17.50 a year from the first anniversary, and Reposit charges £30 a year once a tenancy runs past 12 months. Reposit also charges an incoming tenant £50 if a tenant is swapped or added.
Damage and arrears are owed either way, so the fee is the price of not tying up your cash. And because a new tenancy in England now has no end date, those yearly fees keep running for as long as you stay. A cash deposit comes back in full if nothing is owed, so a lower upfront cost doesn't always mean a lower cost overall.
The Tenant Still Remains Liable
A zero deposit scheme doesn't take away anything you owe. If you leave damage you're responsible for, or rent unpaid, you still have to pay it. Reposit's wording is that tenants stay liable for all valid and properly evidenced charges.
That means loss you're actually responsible for, not fair wear and tear. The deposit scheme mydeposits says in its fair wear and tear checklist that charges must be proportionate and can't include betterment, which means leaving the landlord better off than before.
If you don't pay, the provider may pay the landlord and then come after you for the money. Zero Deposit says it will seek reimbursement, and that an unpaid debt can go to a collection agency and affect your credit rating.
If you think the charges are wrong, you can dispute them. Zero Deposit sends unresolved disputes to The Dispute Service. Reposit charges a £60 dispute fee, refunded if you win. flatfair charges tenants a £25 adjudication fee, but its FAQs give two different conditions for getting it back, so it's unclear when it's refunded.
How does a Zero Deposit Scheme work for Landlords
For landlords, a zero deposit scheme swaps cash in hand for a product's cover. The product decides three things: how much cover there is, the conditions attached, and whether anyone is obliged to pay.
May Attract More Tenants
The main pull of a zero deposit scheme for landlords is that it opens the door to applicants who can afford the rent but haven't got five weeks' rent saved up. Zero Deposit's page for landlords says it speeds up the process and cuts empty periods.
Not having the cash for a deposit doesn't, on its own, say anything about whether someone can pay the rent. The usual referencing still does that job, whichever route the tenant takes.
Additional Protection
Some products advertise more cover than a five-week deposit would hold. Zero Deposit's agent FAQ gives six weeks' rent. Reposit covers landlords for up to eight weeks' rent. flatfair's agent terms describe up to ten weeks, with rent arrears capped at five weeks.
The weeks are only a ceiling. Each product has its own list of what counts. Reposit covers cleaning, damage and rent arrears but not utility bills. Zero Deposit needs claims notified within 28 days of the tenancy ending.
Cover doesn't always last as long as the tenancy. flatfair's FAQs for tenants say its security ends with the tenancy or after 24 months, whichever comes first, and can be extended free through its platform. Its FAQs for landlords leave out the 24-month limit, so the two versions don't match.
On payouts, Zero Deposit advertises paying approved claims within two working days of receiving bank details. That clock starts once a claim is agreed, not on the day it's first raised.
Even where the cover is insurance-backed, as with Zero Deposit and Reposit, it doesn't replace a landlord's own buildings or contents insurance. That's a separate contract, bought by the landlord, and it sits among your btl costs whether or not a tenant uses a replacement product.
Faster Letting
A replacement product takes one hurdle out of a move: the tenant doesn't need their old deposit back before paying for your property. Whether that actually shortens an empty spell depends on everything else in the move.
In my experience, the costs of a property sitting empty, mortgage interest and council tax especially, are what catch new landlords out most. Empty weeks come straight off the year's rent, which is why voids are one of the costs counted in our guide to whether buy-to-let is worth it.
No cash deposit
The trade-off for a landlord is that no money is held. At the end of the tenancy you rely on the tenant paying, or on the product paying within its terms, instead of taking what's owed from cash you already have.
Neither route covers everything. With a cash deposit, anything owed above the deposit is a debt to chase. With replacement cover, the same applies above the cover limit. The risk of an unpaid loss comes with property investment, and a replacement product doesn't remove it.
Zero Deposit Schemes: A Step-by-Step Guide
Here's how a zero deposit scheme usually runs in England, from finding a tenant to the end of the tenancy:
- The landlord or letting agent finds a tenant and runs the usual reference checks.
- The tenant is offered the replacement product as an option. In England, the government's fees guidance says a landlord can't require a tenant to pay for insurance or a service.
- The tenancy agreement is signed.
- The tenant pays the provider's fee, and the provider confirms the cover is in place before move-in.
- The tenancy runs as normal, with the rent paid when it's due.
- When the tenancy ends, the landlord raises any charges for loss the tenant is liable for, with evidence, inside the provider's deadline.
- If the tenant pays, that's the end of it. If they dispute the charges, an adjudicator can decide.
- If the tenant owes money and doesn't pay, the provider may pay the landlord within its limits and terms, then recover the money from the tenant.
How Much Does a Zero Deposit Scheme Cost?
The tenant pays for a zero deposit scheme. With Zero Deposit, Reposit and flatfair, that's at least one week's rent upfront. Zero Deposit says landlords don't pay a penny. Reposit's homepage calls its landlord cover "absolutely free". flatfair's FAQs say it's free for landlords, with one exception. flatfair may take £100 off a landlord's payout, but only if the landlord ignored its advice to reduce charges and an adjudicator then cut them by more than a quarter.
What the tenant pays varies. Take a rent of £1,500 a month. One week's rent is £1,500 × 12 ÷ 52, which is £346.15. This is what each provider's fees, as published on 11 October 2026, come to for that rent:
| Provider | How the landlord is protected | Tenant pays upfront at £1,500 a month | Ongoing fees |
|---|---|---|---|
| Zero Deposit | An insurance contract covering up to six weeks' rent | £406.14: one week's rent plus a £59.99 set-up fee | £17.50 a year from the first anniversary |
| Reposit | Landlord named on an insurance policy, up to eight weeks' rent | £346.15: one week's rent, with a £150 minimum | £30 a year if the tenancy runs past 12 months |
| flatfair | A discretionary service, not insurance: up to ten weeks, with rent arrears capped at five | £420 plus VAT (£504 at 20%): 28% of a month's rent, with a £120 minimum | None advertised, but its tenant FAQs say cover ends after 24 months unless extended free |
The fees come from the providers' own pages: Zero Deposit's tenant page, Reposit's tenant page and flatfair's FAQs. Reposit and flatfair split the fee between the tenants in a shared home.
Prices change, and the providers' own pages don't always agree. Zero Deposit's tenant pages show a £59.99 set-up fee, while its agent FAQ still says £49. flatfair's £420 plus VAT is based on its FAQs. Its agent terms give a different check-in fee, of one week's rent plus VAT. Those terms also say that where an agent's account with flatfair sets out something different, the account wins. The figure that counts is the one in the quote you're given.
Who Offers These Schemes?
Zero Deposit, Reposit and flatfair are three firms offering zero deposit products. Some letting agents offer one firm's product to their tenants.
Agents can be paid for that introduction. Zero Deposit says its partner agents earn a commission for every introduction that leads to a purchase. flatfair's agent terms pay agents a referral fee, worked out as a percentage of the tenant's check-in fee.
Six things in the terms decide what you're actually getting:
- What the tenant pays upfront, and any yearly or dispute fees.
- Whether it's an insurance product or a discretionary service.
- How many weeks' rent the landlord is covered for, and any lower limit for rent arrears.
- How long the cover lasts, and the deadline for raising a claim after the tenancy ends.
- Who settles disputes, and what that costs each side.
- When the fee can be refunded, if at all.
Do I Have to Use a Zero Deposit Scheme?
No. In England, a tenant can't be made to use a zero deposit scheme, and a landlord doesn't have to offer one.
The government's Tenant Fees Act guidance says a landlord can't require a tenant to pay for insurance or a service, but a tenant can choose one, such as a deposit replacement product. Sections 1 and 2 of the Tenant Fees Act 2019 explain why. Offering a product as an alternative doesn't count as forcing it on the tenant, as long as the other option is one the Act allows and is reasonable. Zero Deposit's own agent FAQ tells its agents to offer a cash deposit as the other choice.
Landlords can say no too. The same guidance treats the product as the tenant's choice, not something a landlord must offer, and says a landlord doesn't have to take a deposit at all.
Are They Legal?
In England, the government's fees guidance allows a deposit replacement product when the tenant chooses to use one, and bans a landlord from requiring it. That makes the choice legal. It doesn't vouch for every product's terms.
Wales has its own rules. Rent Smart Wales's guidance for tenants says a landlord or agent can't require you to use a deposit alternative with a particular provider as a condition of your tenancy. The Welsh Government's FAQs say Wales has had occupation contracts since 1 December 2022, under its own law. Under sections 43, 45 and 47 of the Renting Homes (Wales) Act 2016, a landlord can only require security in the form of money or a guarantee. The duty to use an approved scheme and give the details within 30 days covers a deposit, which the Act defines as money paid as security. A guarantee isn't money, so it doesn't go into a scheme. The Welsh Government's deposit guidance sets no five- or six-week cap.
In Scotland, the government's mygov.scot pages on deposits don't mention deposit replacement products. What they do say is that a landlord can ask for up to two months' rent as a deposit, which must be protected within 30 working days of the tenancy starting. Some deposits don't need protecting, such as when a lodger lives with the landlord or the let is a holiday let. The guidance also says it's against the law to charge a tenant any other fees for starting or renewing a tenancy.
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