Should i just trust her?

genuinegal

Hi all,

I am considering moving into a flat to share with one other girl. The rent includes bills and this is stipulated in the Tenancy Agreement.

The landlady is asking for a deposit of £375 and noted in her email that instead of paying this back at the end of the tenancy, I just wouldn't have to pay the last month's rent. Seems fair enough i suppose.

I had my mate check over the contract (works for CAB) and she noted on the Tenancy Agreement that my deposit won't be held in the Deposit Protection scheme which i believe is law.

Now, i have met my landlady - went for lunch with her last week with my prospective flat mate and i get on incredibly well with both of them. The landlady is a professional who works for a prestigious accounting firm and is pretty laid back (didn't ask for references, guarantor etc). I mentioned the Deposit Protection Scheme to her and her response was:

"As I was saying on Sat, I am very informal with all of this and I know I should be more stringent with things like references, guarantors, formal agreements, checking the property regularly etc, but I just dont have the time and all I ask is for a month's notice and for the place to be looked after, and I will always be fair to the tenants. It isnt right that I pay the council tax and bills either, as they should really go in the tenants names. If you are looking for something more formal then I think you might be better finding somewhere else, as I really dont have time to read housing acts and do everything exactly by the book. This is just a standard agreement that I have used, but in reality if you needed to pay late I wouldnt start charging you late payment fees, if anyone has ever needed a few days extra to pay I have always said that that is fine. I am going to Hamburg today until Thursday, so let me know what you want to do.

Do you think she is being reasonable? I love the flat, she seems lovely and genuine enough and i don't believe she'd screw me over - it's just that I have my friend (CAB) and mum saying that i shouldn't hand over the deposit unless it's in this scheme. I am pretty desperate to move (not available till end of June however) and it's such a good bargain for all bills included (in her email above she is merely saying that she is taking responsibility to pay the bills and that she doesn't really have to - so the bills ARE included).

I don't know what to do, i'm so confused!!

Thanks for any advice

BitterAndTwisted

It sounds to me like your prospective landlady does not have consent to let from her lender, so is keeping it all under the radar and avoiding registering with the tax authorities and therefore paying tax on any profit made on the rent.

The risk to you and your friend is of potential repossession by the lender if her mortgage falls into arrears because the lender would not recognise your tenancy and you might have to find alternative housing at pretty short notice.

To be honest, I think that not having your (modest) deposit protected in return for not having any responsibility for bills and council tax, and being able to offset the last month's rent against the deposit might be a risk worth taking as your landlady appears to be undertaking more risks than you and your friend under the circumstances.

Depends on how long you think you might want to rent that flat, how reasonable the rent is and how nice it is compared to other properties available.

adg1

I agree with B&T. It sounds like she is going underground with the letting of her property.

The risk to you is that you'll end up on the street with little notice if her lender finds out.

Talk to the other tenant and see what they feel about the situation if they have lived there for a while.

Get a full receipt and don't part with any money until you are being given the keys in case its a scam.

Its not normal but remember you don't pay your last months rent in lieu of your deposit so you are pretty safe as long as you are aware of the risks layed out by B&T.

genuinegal

Thanks for your responses - most appreciated

Bitter&Twisted - she said in another email that the rent we pay her barely covers the interest only mortgage payments each month, so not sure whether she's making any profit as such... I mean, she said she bought the flat 4 years ago for £120 and got it valued a couple of months ago for £110,00 so she is in effect in negative equity. Again, she highlighted that she'd only put the flat on the market if interest rates went up and she would really struggle to pay the monthly mortgage payment. The rent is £375 per month all inclusive. So yeh, pretty reasonable if you ask me for a city centre flat!! lol

adg1 - The other tenant is pretty laid back and said she didn't get a tenancy agreement when she moved in 12 months ago and is not that bothered really (landlady did point out that she will also do an agreement for her also). I'm replacing her flatmate you see - she's moving out end of June. Do you not think it's a bit tight not giving her the deposit till i have got the keys? I mean, i can't move in till end of June so it's a while off yet..... I was thinking of transfering the deposit electronically, that way ive got a record. As long as it stipulates in the agreement that i won't have to pay my last month's rent then I think....it's pretty reasonable... She seems laid back enough to be honest, lol. I like to think im a good judge of character and if it does go to pot, then i could take her to court anyway for not having my deposit submitted via the protection scheme (although if i say to her in the email 'ok i'll proceed without my deposit being protected' then i am in effect defeating the whole object of obiding by the law if i ever went to court)... - nightmare! lol

ALIBOBSY

If you did go ahead word the email to just say ok I will proceed as per your agreement. Don't mention the deposit at all just in case. Although I would have thought even with your permission she is still legally responsible for protecting the deposit. Maybe she would argue that it isn't a deposit just a months rent in advance?

Sounds like she is keeping her head down and just wants the mortgage covered. The risks are as others have said, but bare in mind if interest rates shoot up she may want more rent or you could get repossed at short notice. Given the small level of deposit and the fact that the other tenant seems to think she is ok and has been there a while it may well be worth a punt.
Just go in with your eyes wide open and ensure whilst there you save yourself a cash "cushion" in case you need to move out fast and need ones months rent and a larger deposit elsewhere.

There is one thing, she could hardly sue you for much at the end of the tenancy without dropping herself right in it so to speak.

whatever you decide good luck

ali x

adg1

genuinegal wrote: »

Do you not think it's a bit tight not giving her the deposit till i have got the keys?

No, I think its being careful and protecting your money.

Personally I'm cautious with any 'below board' activity regarding renting property.

Just for your info, a house on the market in this area was being viewed by a couple of letting agents, one of whom let the property (contracts in, deposits paid etc so properly let) and yet someone with a key was still showing people around the house and taking deposits from them. They only found out they'd been diddled when the 'Let-By' board went up at the property. No one knows who it was but he had a key.

To link that to your post, all this nefarious chappy needed to do was get a mate to confirm he was the LL and that he had no agreement etc as a convincer for you to part with your money.

You seem confident its above board (in a sense) so use your instinct.

Why not pay a couple of quid and pop the address into the LandRegistry website to see whether the owners details check out with those you have been given by the person telling you they are the owner.

BitterAndTwisted

I didn't realise that you would be moving in with someone who has already lived there for a while so not giving her the deposit until you have the keys is much less of an issue to my mind. Under the circumstances I'd be willing to take the risk of your deposit not being protected. If you wanted to be sly, just not mention in your email that you acknowledge that the deposit won't be protected in one of the schemes. As already discussed, the landlady is taking far more risks than you will be. If it's nice flat and you think you'd be happy sharing with this other person I say "go for it"

Shadowsfall

What does your gut feeling say? Or your friend?

Hard to judge - if something did go wrong, you might be in a bad position... however, I had a pretty informal arrangement with my former landlady while at uni and we ended up being great mates and still are.

ItMightBeUsefulOneDay

genuinegal wrote: »

she said she bought the flat 4 years ago for £120 and got it valued a couple of months ago for £110,00 so she is in effect in negative equity.

This is why she's keeping it all "off the books" so to speak: The banks aren't doing BTL mortgages on LTVs greater than about 75% so she'd be refused permission if she asked. Stupid for many reasons but the banks are still sucking their burnt fingers from the recent fallouts and anything remotely risky is turned away.

There is a risk that you could be turfed out on your ear with near zero notice if she can't keep up with the payments but given the situation I'd be tempted to take the risk if you love the place. The deposit is fairly modest and the worst case seems to be that you'd lose it if the bank finds out.

pyueck

It is the landlords obligation to protect the deposit, whether or not the tenant agrees for it not to be protected. If the money is being used to protect her in case of damage or default on rent then it is a deposit and needs to be protected. How do you know this person will not get their property reposessed and you will be out on the streets in days with your deposit in thin air?

Under the landlords plan, the deposit is a complete waste of time as legally they can't issue you with a section 21 or deduct any money from the deposit, and you can sue for 3x the deposit amount. I am all for the landlord acting informally, but if this is the case there should be no deposit full stop, as it is not protecting anybody.

If the LL is not willing to abide by the laws on deposits then they shouldn't ask for one.

carefullycautious

Also what happens if you are burgled, the house burns down, Or you are injured. If nothing is 'above board' you are putting yourself at risk. What else is she laid back about.

I know who I would rather go with, a landlord who does things by the book