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Losing your tenancy deposit on false grounds is going out of fashion faster than voting Labour. A landlords' insurance policy has just hit the market that ends the need for deposits: the No Deposit policy, from Paragon Advance, will extract fees from tenants who break their contracts. Good tenants may nothing.

When deposit protection became compulsory a year ago, three schemes approved by the Government - the Tenancy Deposit Scheme (TDS), the Deposit Protection Service (DPS) and MyDeposits.co.uk - became available; they now protect a total of £885 million in tenancy deposits.

The emergence of insurance policies is perhaps no surprise as the deposit protection market expands, particularly as some landlords report that the new schemes make withholding deposits too difficult. But with the fee for insurance charged to the landlord higher than those for approved schemes, tenants should worry that the costs will be reflected in higher rents.

The older schemes all settle disputes over broken contracts out of court, while No Deposit would require a court case before the tenant could be forced to pay damages. Another flaw in No Deposit may be that its promises only to “recover damages up to the value of one month's rent”, which is less than the six-weeks deposit that many landlords now require.

The London Mayor's Housing Forum has decided to address deposit-free schemes at its next meeting in July. Does the notion of a deposit-free rental market concern Boris as much as it did Ken? Boris's people say that he will be “investigating whether tenancy deposit schemes are delivering for the London housing market”.

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