Sebastien Barrillier is president of Locnest.
What is Locnest and how does it work?
Barrillier: Locnest provides lease guarantee services to Canadian landlords and tenants. Our lease guarantee can replace security deposits in jurisdictions where they’re permitted and act as a guarantor or co-signer in jurisdictions where they’re not, providing landlords with a secure and simple solution to be protected, without the hassle and paperwork, and tenants access to comfortable, affordable housing without tying up their savings.
Locnest is arranged by and paid for by tenants, who can sign up for a lease guarantee online, pay an eight per cent fixed annual fee on the guaranteed amount and a one-time $20 administrative fee – freeing up more of their cash they would’ve spent on a security deposit for other things.
Built on a successful 20-year-old Swiss model, the lease guarantee model holds an 80 per cent market share in Switzerland.
Why is this being introduced to the Canadian market now?
Barrillier: Today’s rental market in Canada is tough. Renters are over-stretched financially to keep a roof over their heads as they spend an increasing amount of their income on rent. Security deposits further increase the financial weight for tenants who, no matter their income level, find having their money tied up for the duration of the lease burdensome. A burden that doubles when tenants change dwelling and must pay another security deposit upon signing a new lease, while having to wait to the end of their current lease to recover their previous deposit.
There’s also the issue of unscrupulous landlords refusing to give security deposits back for unfounded reasons.
We think Canadians deserve a break.
Why is it good for landlords?
Barrillier: Locnest provides landlords with peace of mind, insulates them from many of the risks of renting, reimburses them quickly in case of default or property damage and protects them for higher amounts.
Security deposits often only cover up to one month’s rent, but a lease guarantee can pay up to $5,000 in case of default or property damage.
It also reduces the administrative burden for landlords by assessing the solvency of prospective tenants through credit checks, by eliminating the administrative tasks associated with holding security deposits, such as opening separate bank accounts, saving landlords time and money.
Why is it good for tenants?
Barrillier: A Locnest lease guarantee can replace security deposits, freeing tenants from the constraint of having their money tied up for the duration of the lease or, worse, of having two deposits tied up at the same time as they sign a new lease.
As our lease guarantee is evidence that the solvency of a tenant has been vetted, it helps reassure a prospective landlord and gives tenants a competitive edge over other prospective tenants vying for the same apartment.
And in the case of a disagreement on terms, tenants are guaranteed that money will only be paid to a landlord if they agree, or in the event of an enforceable judgment from a court.
What do you see the potential for the company in Alberta?
Barrillier: There’s great potential for Locnest in Alberta. Since security deposits are required by law, it’s become commonplace in the province.
Locnest is going to free up time and money for both sides of this equation.
I think we have an opportunity to create a more dynamic rental market in Alberta by opening properties to more renters and giving landlords confidence that their tenants are financially secured.
– Mario Toneguzzi