Rental deposit lending business Fronted has raised over £20m in a debt and equity deal led by Fasanara Capital. This comes after Monzo co-founders backed the fintech in a £1m fundraise in May 2021.
The funds will be used to develop an app where Fronted users will be able to use an interest-free moving credit ‘lifetime deposit’ and pay a second deposit, before receiving the prior deposit from their current tenancy.
According to the lending organisation, there is almost always the need to pay two deposits, especially when the landlord who owns the new property wants the deposit paid as soon as possible to reduce the risk of an empty home.
In addition to this, the landlord of the old property requires the money to be available for any deductions after the tenant moves out. On average, renters have a double deposit overlap of 35 days.
Fronted would secure the return of the old deposit and finance the new deposit in full, giving renters 10 weeks to pay off the balance. This service would be in addition to Fronted’s current offering: a 12-month loan for renters who do not have an existing deposit.
The app and the lifetime deposit will launch later in 2021 with a small testing cohort and will roll out across England and Wales in 2022. The membership will cost £40 excluding taxes.
Jamie Campbell, Fronted CEO, says: “Asking renters to come up with another five weeks rent when they already have money protected is ludicrous. Renters should be allowed to pay a new deposit with the one they already have. In a world where rent prices are going up, and homeownership is increasingly difficult to achieve, this is another example of a housing market rigged against young people.
“A lot of young people feel like the housing market is stacked against them. The lifetime deposit solves one of the big financial issues renters face when they move and we will continue to find and fix problems renters face to rebalance power in the housing and rental market.”
Francesco Filia, CEO of Fasanara Capital adds: “The innovation that Fronted brings to the rental market can benefit all participants from renter to agent to landlord, helping remove a key friction and reducing risk. We are delighted to back yet another innovative fintech that is solving a real pain point for consumers.”