Rental deposits: how they are hurting the rental market

Renting should be easy. The process of renting should be simple and swift - built on mutual trust between tenant and landlord. Yet, for small and medium-sized companies, moving today is the second most stressful task that they have to deal with, even more than handling finances! The associated hassle has astounding consequences. Almost 80% of offices choose to delay moving, opting to stay in insufficient facilities just to avoid the stress of relocating.

There is something inherently wrong with the rental process today as it lacks the mutual trust on which it is supposed to be built. Tainted with lose-lose situations, the rental process has grown ever more inefficient. One of these inefficiencies, the rental deposits, is the embodiment of mistrust between landlord and tenant. The system is old and as with most old things, it’s grown archaic. Today it’s unclear who the rental deposit actually benefits. Certainly not the tenant. Whether it’s a business or person, they lock up large sums of money that they otherwise could have invested in their business or fixed their car for. The impacts on the tenants have actually been shown to be so detrimental that it often forces them into debt. All while their money is rotting away without doing any good. 

How about the landlords then, does the deposit benefit them? As it turns out, not really. In fact, a security deposit brings multiple headaches. The rental process is slowed down, administration costs get higher and vacancy rates increase. You might ask yourself, why do people use it? The answer: security and tradition. Landlords need security and the deposit provides just that. Furthermore, both tenants and landlords are used to it. Opting for a deposit as security has become a habit through decades or even centuries. But it’s a bad habit, old and clunky. It’s an extremely costly security for a risk that is often minimal. 

Fortunately, there are alternatives. Solutions such as the one we offer at Ebie took the best that insurance has to offer and brought that to the real estate industry. The result? A convenient and dependable insurance solution that benefits all parties involved in the rental process, allowing tenants’ capital to stay where it belongs. Hopefully, these solutions can mark the end of the deposit era. 

Ville Löthénauthor
Ville Löthén
Feb 3, 2021