Deposit Alternatives for Tenants: How They Work and What You Need to Know
March 2026
With rising living costs, renting a new home can feel like a big financial stretch. Deposit alternative products, also known as deposit replacement products, are becoming an increasingly popular option for both landlords and tenants, offering a simpler way to cover upfront costs without locking away a large cash deposit.
Recognised in the government’s “How to Rent” guide, deposit alternatives are fully compliant with the Tenant Fees Act, provided tenants are offered a clear choice between a standard deposit and the alternative product.
We’ve put together this simple guide to help tenants understand how deposit alternatives work and what to consider when choosing the right option for their tenancy.
What is a deposit alternative product?
Traditionally, tenants are required to provide a cash deposit of up to five weeks’ rent at the start of a tenancy. Deposit alternative products provide another option by allowing tenants to pay a smaller upfront fee instead.With our chosen provider, Reposit, tenants pay a once-off, non-refundable fee equivalent to one week’s rent, upfront at the start of their tenancy - instead of paying a cash deposit. We believe offering our tenants a choice between this and a traditional cash deposit gives them the flexibility to best manage their money and ensure they are in a secure financial position when they move into a property. FCA-authorised and fully regulated, Reposit offers protection for landlords while giving tenants the best value for their money.
For those already with a traditional cash deposit, Reposit also offers a “Switch” product, which allows eligible tenants to get their cash deposit back during a tenancy and take a Reposit out in its place.
It’s important to note that deposit alternatives are not a form of tenant insurance. Tenants remain fully liable for any valid costs at the end of the tenancy, such as damage to the property or unpaid rent.
What are the benefits of deposit alternatives for tenants?
- Lower upfront cost
Paying a one-off fee equivalent to one week’s rent can make moving more manageable than setting aside a larger deposit. - Reduced need to borrow
Tenants may avoid using overdrafts, credit cards, loans, or support from family to cover the initial cost. - More financial flexibility
Funds that would have gone to a traditional deposit can be used for moving expenses, savings, investing, or day-to-day costs. - Fairer measure of affordability
The ability to produce a large lump sum isn’t always the best indicator of financial stability - professional referencing and affordability checks give a clearer picture. - Easier start to tenancy
Reducing reliance on high-interest borrowing helps tenants begin the tenancy in a more stable position.
What happens if there is a dispute with a Reposit deposit?
As with a traditional deposit, tenants remain responsible for any valid end-of-tenancy charges, including unpaid rent or property damage. If there’s a disagreement, tenants have the right to dispute the charges through Alternative Dispute Resolution (ADR).- A £60 dispute fee is required, which is refunded if the adjudicator reduces the charges.
- Disputes are typically reviewed and resolved within 14 days, offering a quick outcome for both tenants and landlords.
Deposit alternatives can make the practical side of moving a little easier, helping tenants manage costs more effectively from day one. While they don’t remove responsibility for the property, by understanding their options and responsibilities, tenants can choose the approach that works best for them and start their tenancy with confidence.
For more detailed information, tenants can visit Reposit directly.
Lawsons & Daughters
Experts in property. Part of the community.
Disclaimer: This article is not financial advice. It is solely to provide insight into why Lawsons & Daughters decided to offer a deposit alternative to our landlords and tenants. Independent and professional advice should be taken before renting a property, or buying financial products.