Renting + Deposit - Quick lookover terms

huntersc

Hi all

I'd appreciate if someone in the know would be willing to look over the terms of a deposit I am putting down for renting a property. It seems okay to me but I'd love a second opinion if possible. They say:

1.13 A security DEPOSIT of £XXXX Is to be paid on or before the signing of this agreement

1.14 The AGENT
Will hold the security deposit as STAKEHOLDER referred to in clause 1.13
and no interest will be paid to the Tenant

We're renting on a 12 month basis, with a get out clause after 6 months. Is what they refer to as 'Stakeholder' comply with the new regulations? Is it another way of describing a custodial scheme?

Shelter states:

• a custodial scheme. With this scheme, the landlord or agent pays the deposit to the scheme, which will keep it until the end of your tenancy
• an insurance scheme, where the landlord or agent keeps the deposit but pays insurance premiums to the scheme. This means that the deposit is insured if there is any dispute, and the scheme will repay the tenant the agreed amount directly. The insurance scheme can charge fees to landlords for membership and can require contributions towards the costs of insurance

What should I be asking of the lettings agent or are they complying with their obligations?

Any help much appreciated.

paintpot

Hi there

Tha agent is obviously using the insurance backed scheme rather than the custodial so yes, the agent holds onto the deposit as stakeholder.

They are required to give you the details of the scheme and its terms - what is known as prescribed information

Take a look at the following link for more info.

http://www.rla.org.uk/landlord/tenancy_deposits/tds-Documentation.shtml

If it an offence not to provide the tenant with the prescribed info within 14 days of receipt of the deposit.

Hope this helps.

huntersc

Great, thankyou very much.

Incisor

huntersc wrote: »

1.14 The AGENT
Will hold the security deposit as STAKEHOLDER referred to in clause 1.13
and no interest will be paid to the Tenant

We're renting on a 12 month basis, with a get out clause after 6 months. Is what they refer to as 'Stakeholder' comply with the new regulations? Is it another way of describing a custodial scheme?

Deposits on any transaction between 2 parties can be held by a 3rd party in 2 main ways:

• As Agent
• As Stakeholder

As Agent means that the money has been given to the Letting Agent to hold on behalf of the Landlord, so they are only accountable to the Landlord. As Stakeholder means that they are accountable to both Landlord and and Tenant or prospective tenant.

The explanation could be given slightly differently elsewhere, but if you look into the 2 ways of holding a deposit as given above, you should get the whole picture.

Notlob

Incisor wrote: »

Deposits on any transaction between 2 parties can be held by a 3rd party in 2 main ways:

• As Agent
• As Stakeholder

As Agent means that the money has been given to the Letting Agent to hold on behalf of the Landlord, so they are only accountable to the Landlord. As Stakeholder means that they are accountable to both Landlord and and Tenant or prospective tenant.

The explanation could be given slightly differently elsewhere, but if you look into the 2 ways of holding a deposit as given above, you should get the whole picture.

As far as TDS is concerned, not any more as "Agent for the Landlord" no longer applies. Deposits will be held as "Stakeholder", even if the TA states otherwise.

Notlob

Incisor

Notlob wrote: »

As far as TDS is concerned, not any more as "Agent for the Landlord" no longer applies. Deposits will be held as "Stakeholder", even if the TA states otherwise.

Notlob

Point was not to do with TDS, it was to draw the distinction between 'as agent' and 'as stakeholder', so that the OP would hopefully understand what was meant by the term 'as stakeholder' in the agreement and feel reassured.

clutton_2

irrespective of what is in any agreement - its my understanding that the LL is ultimately responsible in law - if a LL employs a useless agent who runs away with the tenants money - i think it is the LL who has to reimburse the tenant - even if the tenant paid the LA

Notlob

Incisor wrote: »

Point was not to do with TDS, it was to draw the distinction between 'as agent' and 'as stakeholder', so that the OP would hopefully understand what was meant by the term 'as stakeholder' in the agreement and feel reassured.

Your point is academic as the OP was referring to the new deposit requirements. It would seem best not to confuse the issue by throwing in a distinction that no longer applies.

Of course where TDS does not apply, you are correct.

Notlob

Notlob

huntersc

From what you post, I am not sure what plans the agent has regarding deposit protection. Yes, the clauses suggest that it will not be in the DPS (custodial scheme). However, unless the insurance based schemes have changed their rules, the TA should note down which scheme protects the deposit. As this is not noted on the clauses you posted and if there is no other reference within the TA, it could suggest the agent is using a pre TDS legislation agreement, in which case I would contact the agent and enquire.

Of course this assumes they are using an AST agreement!

Notlob

huntersc

Thanks all

I have checked and apparently, in their own words,

"IMPORTANT

This Agreement and is not subject to the Housing Act 1988 (as amended by the Housing Act 1996) and the tenancy hereby created is NOT an Assured Shorthold Tenancy"

I guess that changes things?

I did the check on Shelter's site and according to the answers I gave it should be an ASL. Perhaps this is an old contract or something.

Incisor

Notlob wrote: »

Your point is academic as the OP was referring to the new deposit requirements. It would seem best not to confuse the issue by throwing in a distinction that no longer applies.

Of course where TDS does not apply, you are correct.

Notlob

It might seem best to you. The point is not academic if you need to understand what is meant by 'holding a deposit as stakeholder', and it can be clarified by contrast to alternatives. I don't believe in treating posters as children and withholding information from them