The ASA has backed deposit replacement firm flatfair’s promise to protect landlords and tenants, as it throws out a spurious complaint from a rival.
The Advertising Standards Authority (ASA) has ruled that landlords and estate agents can have full confidence in the protection offered to landlords and tenants by a payment technology company backed by Index Ventures and the founders of Transferwise and Onefinestay.
The ASA said in its judgement that flatfair’s promises of “‘Keep your property protected’ and ‘Get up to double the protection of a traditional tenancy deposit’ had been substantiated and were therefore not misleading”, according to the watchdog’s judgement.
The spurious claims made to the ASA that flatfair was “misleading” people were submitted by competitor Zero Deposit, and related to a page on flatfair’s website from July 2019 called: “How it works – Landlords.”
The claim tried to allege that flatfair’s payment platform, used by the UK’s leading estate agents, could not back up claims to offer up to 12 weeks’ protection. The ASA has refuted the accusations and did not uphold Zero Deposit’s claim.
Flatfair allows tenants to secure a property with just a debit card instead of paying a large deposit. Set up by former Deutsche Bank, Google and King execs, the company has been successfully operating for many years and is one of the UK’s leading deposit-free renting platforms. The service is already available through some of the UK’s leading estate agents including Spicerhaart, CBRE, Greystar and Hunters. This summer, it raised $11m from major VC investors including Index Ventures, Revolt Ventures, a proptech VC supported by Meyer Bergman, and the founders of Onefinestay and Transferwise.
Flatfair’s aim is to allow estate agents to be a neutral player in deposit negotiations – giving them an independent portal they can use to reduce dispute and encourage better behaviour from all sides.
The essence of the spurious complaint was that flatfair, which unlike other deposit replacement services is not an insurance product, doesn’t offer the protection it claims. However, thanks to flatfair’s digital payment technology there is no need to sell tenants an insurance product – something that could easily be mis-sold to tenants.
Flatfair’s platform is far more transparent, since all it requires is a debit card to secure a tenancy, much like checking into a hotel. This is facilitated through Open Banking and means a tenant only pays for what they owe after the charges are agreed at the end of the tenancy. If they change card or change bank, it’s still possible to pursue payment and the ASA’s ruling makes it clear that flatfair has a 100 percent track record protecting landlords. Flatfair offers to buy any debt from landlords at full face value for any damages or rent arrears, as well as offering free recovery for any additional charges.
The ASA said in its judgement: “We noted that flatfair had agreed to purchase tenants’ debt from landlords, at 100% of the value of the debt (up to a maximum of 12 weeks’ rent), in 100% of cases where an Established Charge had gone unpaid for more than two weeks, and where the landlord complied with the referencing requirements.”
Flatfair founder and CEO, Franz Doerr, said: “Our business was founded through a genuine desire to make renting fairer, more transparent and more accessible and we’re delighted that this complaint has rightly been refuted. Deposits are a major bugbear for millions of renters, wasting significant time for thousands of agents. Our technology aims to make renting as easy as checking into a hotel and savvy agents are using our platform because they need a quicker process that enables tenants and landlords to communicate fairly, massively reducing conflict and distrust.”
How flatfair works
Flatfair’s business is founded upon making life easier for estate agents who are often caught up in deposit disputes around unpaid rent, damage or cleaning charges.
The service protects landlords while giving tenants the ability to move into a property instantly by enabling them to forgo the need to pay an upfront deposit of 5 weeks’ rent. Instead of shelling out a full deposit, tenants pay a fee (equal to a week’s rent plus VAT) and when the tenancy ends, any outstanding costs are calculated.
Agents or landlords notify tenants of the costs they propose using flatfair’s portal and both parties can communicate on the amount via the portal – keeping things transparent. If they agree, the landlord becomes entitled to that amount (the “Established Charge”). If they can’t agree, things are referred to the government-approved independent adjudicator, “mydeposits”, which will decide the amount of the Established Charge.
In most cases, things are settled quickly. But in the minority of cases where the tenant fails to pay the Established Charge, as the ASA has ruled, landlords and agents can have full assurance that flatfair will ensure they are protected.