RLA advises landlords not to take deposits...

guppy

From Estates Gazette:

The Residential Landlords Association has been attacked for advising landlords not to take deposits but instead to take two months’ rent in advance at the start of the tenancy.

RLA director Alan Ward said: “It’s a bureaucratic process. If it goes wrong then it tends to work against the landlord. If you are a compliant landlord with compliant tenants then why bother with it? Two months’ rent up front is generally acceptable.”

Liz McCallum, lettings director at quoted landlord Grainger, agreed, adding: “This is not good advice. It is totally contrary to the spirit of the legislation, which is that landlords are entitled to damages if they can prove them and have costed them appropriately.

Duncan Salvesen, director at London-based landlord Dorrington, said: “This will not assist in generating transparency and confidence in the private-rented sector.”

Full article at: http://www.egi.co.uk/Articles/Article.aspx?liArticleID=687667 (registration required)

This advice apparently follows a court case (since overturned) where a landlord was ordered to pay a penalty of three times the deposit for failing to provide a tenant with required information about how his deposit was being kept...

Anyone planning to follow this advice? I can imagine some tenants having trouble budgeting for two months rent in advance.

neverdespairgirl

guppy wrote: »

Anyone planning to follow this advice? I can imagine some tenants having trouble budgeting for two months rent in advance.

If the 2 months' rent in advance is effectively a deposit, it falls foul of the scheme and must be registered.

So, for example, if I pay 2 months in advance on 1st Sept, and am expected to pay another month on 1st Oct, but get my extra month back if there is no damage, it's a deposit.

tbs624

Yes, it's an interesting one this one, isn't it?

The case referred to by Guppy was presided over by Judge Bullimore in Sheffield County Court on August 8 2008.


I'm not sure that the advice has been put forward because of that case or just come more into focus - these sort of options have been suggested by the LL associations for quite a while.

What the RLA are saying AFIAA is that they have been advised that so long as the Tenancy Agreement makes it absolutely clear that the payments are made as rent, and not security for rent, and that clear dates and payments are specified then their "no-deposit" system should be effective.

Their suggestion is that the tenant pays rent instalments 1 and 2 at the start of month 1, then instalment 3 at the start of month 2, instalment 4 at the start of month 3, instalment 5 at the start of month 4, instalment 6 at the start of month 5 and then nothing for the final month.

Presumably this would be yet another area that would have to be tested in court - why on earth the lawmakers couldn't just get the wording of the current legislation sufficiently tight so that the spirit of the law can be properly applied is beyond me.

I also can't actually see how this no- deposit suggestion helps LLs with getting tenants to honour their obligations to return the property in a reasonable state at FT expiry?

From a tenant's point of view, it wouldn't be a hugely different amount from paying a month's rent in advance plus the normal bond/deposit - in fact in some cases it would mean a lower amount to cough up at the start of a tenancy, as some LLs currently ask for the standard month's rent in advance plus a deposit equivalent to 6 weeks rent (some even a full 2 months)

epz_2

there is the one really big problem for the landlord though.

if the tennant gives 2 months notice to leave they only need to stop paying the rent at the same time. since the rent has been paid up till they want to leave i dont see how they can expect a tennant to keep paying rent or to ask for a deposit after a contract has been signed.

now correct me if im wrong but whats the point of holding onto some cash all the way through the tenancy but by the time you inspect and want to get cash off a tenant they are now holding the cash and can tell you to bog off.

TJ27

I'm thinking along the same lines as epz. Tenants would have to stump up the same sum of money at the start of the tenancy but would simply stop paying long before it ended. If they do leave the place in a mess what money is the landlord going to hang onto to sort it?

Sounds to me as though this method of doing things could work in the tenants favour. If they KNOW the landlord can't hold onto their money they may even be MORE likely to trash the gaff. There's just no incentive to leave it clean and tidy.

vigesimal

I'm not sure how this works in a landlords favour either. The landlord can't even claim rent arrears once the tenant has given notice, as the rent is paid up until the tenant leaves. With no deposit held, how can the landlord get any damages money (apart form going to court)?

vigesimal

tbs624 wrote: »

Presumably this would be yet another area that would have to be tested in court - why on earth the lawmakers couldn't just get the wording of the current legislation sufficiently tight so that the spirit of the law can be properly applied is beyond me.

From what I have been reading on here, this does seem to be a badly written law. Some landlords seem to be getting away with not protecting the deposit by putting it in a scheme when they get the court papers, even though the law says they had to do this within 14 days of taking a deposit. It is them up to the judge to decide the wording of the law.

Surely tenants who find out their landlord have failed to deposit their money in a scheme, should wait until after they are out of the property and the deposit has been returned, before they take the landlord to court? That way, the landlord can't put the deposit in a scheme as the tenancy has ended and they have still failed to protect the deposit within the 14 days of taking it. Then the court will have to implement the 3x deposit penalty payable to the tenant.