Next steps:
Following our Provider Showcase in June 2018, one local authority and one provider are now piloting Transitional Insurance. If you would like more information please contact Tom Schneider (tschneider@uk.ey.com). You can also download more information in the 'Transition Insurance - Call to Market Pack' on the right. Details of the full schedule are listed below.
What is the Transition Insurance programme?
High deposit costs and the requirement to provide this up front is a significant obstacle for an increasing number of people looking to move between private rented sector (PRS) properties or looking to enter the PRS market for the first time. 4 in 10 people who declare themselves to local authorities as homeless are in that situation due to loss of shorthold tenancy. Research undertaken by Crisis reports 89% of Local Authorities reported difficulties in finding private rented accommodation for homeless people last year.
Through engaging with our key stakeholders, we would now like to explore the potential options for a product to replace the need for upfront deposit costs with a wide range of insurance providers. Instead of providing a lump sum deposit to secure a property, a prospective tenant would take out insurance which covers the landlord for costs incurred which, previously, would have been taken from the deposit amount.
We are co-designing the product with local authorities, landlords, tenants, and providers. So far we have held working groups and engaged in soft market testing to refine the specifications.
This process is not a procurement exercise, however, as that will remain the prerogative of local authorities themselves. Providers who take part in this should be better placed to address local authorities’ needs as a result, however, and should benefit from the co-designing process.
What are the goals for local authorities?
The Homelessness Reduction Act (HRA), which came into force on 3 April 2018, places a legal duty on councils to give people meaningful support to try to resolve their homelessness, as well as introducing measures to prevent people becoming homeless in the first place. There is evidence to show that an increasing number of people, albeit in employment and currently renting, will fall within local authorities’ obligations to support them in avoiding homelessness.
This product should be able to offer local authorities a preventative measure to some cases of homelessness while also reducing their financial burden when helping residents secure a tenancy.
What are the benefits for other stakeholders?
The product should take account of the expected benefits for other stakeholders such as tenants and landlords. For tenants, Transition Insurance should make it easier to move between properties by making the process more affordable. It should also provide extra security in some cases by reducing the amount of fees claimed for work that is not carried out.
For landlords, it is expected that this product will help to reduce void periods with more tenants able to move more flexibly and with an increased pool of potential tenants as barriers to entry are reduced. Insurance will also offer security to landlords who can be reassured that they will have a guaranteed repayment period for damages repaired.
Our process:
As part of this process, we held an ‘open day’ on 11 May to which we invited local authorities and insurance providers who are looking to be involved to share further details of our stakeholders’ requirements and work with them to offer a clear understanding of what is best suited to local authorities’ needs. Through our ‘call to market’ process, launched on 21 May, we asked providers to submit their proposals on how they could develop a product that may meet the stated requirements of local authorities in London. We will issue interested providers with a set of design principles to guide their thinking.
Our goal is to help providers shape their offer so they are best prepared to meet the needs of local authorities. We will offer further development in our Provider Showcase event where a panel will be able to assess and offer feedback on the proposed products.
Details of the next steps of the process are listed below:
21 May – Launch the ‘call to market’
We issued the call to market pack , including the prospectus and detailed specification document to interested providers. The pack can be downloaded from the 'Related Documents' section on the right hand side of this page.
4 June – Deadline for responses from the market
We have reviewed the responses to the call and offered feedback to providers.
15 June – Invitations issued to our provider showcase event
This event invited providers to present their proposal to a panel representing key stakeholders, and members of the London Ventures team.
20 June – Provider Showcase event
The panel explored the proposals further and had the opportunity to ask providers for more information about their products.
3 July – Feedback from the showcase event issued
Further feedback was issued to explain the panel’s views.
About London Ventures:
London Ventures is a partnership between London Councils, the umbrella body for the 32 London boroughs and the City of London, and EY, a leading professional services firm, to bring innovative private and third sector solutions to the public sector, using cutting-edge technology to reduce costs and improve the effectiveness of services.
London Ventures works with ‘Venture Partners’ whose services’ we promote to London boroughs as a way of driving greater efficiency and effectiveness in their operations.