An alternative to the Government-backed tenancy deposit protection schemes has been launched by FCC Paragon called the Smart Deposit Solution.

It is a warranty product which has been introduced to help landlords deal with the increased legislation which they are required to adhere to and the rising cost of living which may mean tenants are unable to afford the upfront cost of a deposit. The scheme allows tenants who pass the reference process to pay a small one-off fee enabling them to move into a property.

Bryn Cole, managing director of FCC Paragon, said: “I felt it was time that something changed and I wanted to create a real alternative to one of the insurance or custodial schemes currently on offer, especially with the deadline for re-registering fast approaching on 6th April 2010. With our guarantee, once the tenant has successfully passed the full referencing process, they pay a one off fee which allows them to move into a property without having to find a large, sometimes unaffordable upfront sum.

“The landlord is then provided with a Smart Deposit Solution warranty contract which covers them for any damage to the property, up to a maximum of two months rental value, and the final month’s unpaid rental if the tenant should leave not having paid this, without them having to worry about holding a tenant’s deposit. Not only do both the landlord and tenant benefit, the managing agent avoids having to place a deposit in a costly national scheme and the property can be advertised to a wider range of prospective tenants.”

Letting agents have been impressed by the new product, with some ready to switch from the current scheme they are attached to.

Kevin Winchester, managing director of Winchester lettings, said: “Feedback from landlords so far has been extremely positive in the main because it offers them greater protection. We would only ask for a deposit to the value of one month’s rental value but, with this scheme, they receive up to two months rental value for dilapidations. With our current scheme, if a dispute occurs, the Alternative Dispute Resolution (ADR) service is the default way in which to resolve the problem but this can be a long and drawn out process. If there is a dispute under the Smart Deposit Solution warranty, claims are processed within a 14-day period so the landlord doesn’t have to wait too long.”

Under the new scheme, claims can be made for either dilapidations, non payment of the final month’s rent or a combination of both if the situation occurs.