A lower payment at the start of a tenancy can help with moving costs, but it is not enough to establish whether a deposit alternative is good value. The important comparison is what you pay over the full tenancy and what you may still owe when it ends.
GOV.UK’s current Tenant Fees Act guidance for England lists deposit replacement products among services a tenant can choose. It says a landlord cannot make a tenant pay for a loan, insurance or a service contract as part of the tenancy. A product presented as optional should therefore be explained as a genuine choice.
The government’s earlier detailed guidance also distinguishes non-refundable replacement-product fees from a traditional refundable deposit. Read the current terms of the particular product rather than assuming every scheme operates in the same way.
Write down both options
Ask for the cash-deposit option and the replacement-product terms in writing. Identify any initial fee, recurring charge, renewal payment or other cost. Calculate the total for the length of stay you expect, and repeat the calculation for a longer stay.
A simple comparison sheet can show money temporarily tied up separately from money that will not be returned. That helps avoid treating two very different payments as though they were interchangeable.
Check what happens after a claim
Ask who benefits from the cover and whether the provider can seek payment from you for an accepted claim. Establish how damage or arrears are assessed, what evidence is used and how you can challenge a disputed amount. Do not assume the fee buys freedom from responsibility for damage or unpaid rent.
Keep the inventory, dated photographs and correspondence regardless of the option chosen. Clear records are useful when the parties disagree about condition or payments.
For landlords and agents
Explain the product without suggesting that lower upfront cost means lower overall cost. Make sure staff can identify the provider’s complaint route and describe the cash option accurately. Revisit marketing wording if tenants are confusing a replacement fee with money held for return later.
If an applicant cannot afford a deposit, independent advice about available assistance may be useful before buying a financial product. Citizens Advice and the local council can be starting points.
This is a comparison checklist, not an endorsement of a provider. Read the terms and obtain advice if the liabilities or charges are unclear.
Sources: GOV.UK Tenant Fees Act guidance for tenants, checked November 2026; government detailed tenant guidance on deposit options.