Wannbe Landlord

follyfoot

I will be renting my flat very soon. I keep hearing about deposits which the landlord can no longer hold. Can anyone explain how this works please?

amboy

there are plenty of sites to explain this, just google deposit protection service.

Basically there are 2 schemes -

1 Insurance where you pay a joining and annual fee but actually get to hold onto the deposit.

2 A FREE custodial scheme where you send them the money and the tenant earns int on the money.

Nobody knows the efficiency of any scheme yet but if you create a tenancy after the 6th April then you must register with one if you take a deposit.

The crucial point is to now do a thourough inventory as you will need this if you go to the dispute service at end of tenancy.

HTH

Mrs_pbradley936

Just had a quick look at https://www.mydeposits.co.uk and I think I would be sure to use an agent.

djm1972

From what I can work out, as a landlord, there's nothing actually stopping you doing away with the deposit altogether and simply factoring it into the rent.

I'm aware that for this to work it would require the majority of landlords in a market area to be doing the same thing.

TJ27

Yes, I think you're quite right. I'm not a landlord myself but I work with landlords daily and several in my area have told me that they just won't bother with a deposit. I'm told it's more hassle than it's worth.

I guess that somehow factoring it into the rent might be a possibility. I'm not quite sure how that would work though. I suppose a slightly higher rent with no deposit to part with would appeal to quite a few tenants. As a L/L you'd have to vet tenants very carefully though I would think.

Mrs_pbradley936

I would not want to add the deposit on to the rent – apart from making the rent more expensive it would give the landlord a higher income tax bill. Also you cannot serve Notice on people to get them out if you are not in this scheme.

leejo_2

An alternative to the deposite that I have heard about is to take two months rent in advance(just to make sure they are financially solvent) and then their last month's tenancy is rent free. This is liked by the tennants, as no rent to pay in the last month and by landlords, as this tends to stop the practice of the tenant disappearing leaving one months rent owing.
This tip is from someone who has never taken a deposit, just used this system sucessfully for the last few years

thesaint

pbradley936 wrote: »

I would not want to add the deposit on to the rent – apart from making the rent more expensive it would give the landlord a higher income tax bill. Also you cannot serve Notice on people to get them out if you are not in this scheme.

This isn't quite right.

You can serve notice on tenants whether or not you are in the scheme.
If you don't take a deposit then you can serve a notice requiring possession just like before.

Even if you take a deposit and fail to register it, you can still serve notice on a tenant, but cannot use the S21(No blame) route.
You wil also be clobbered for not registering the deposit.

follyfoot

leejo wrote: »

An alternative to the deposite that I have heard about is to take two months rent in advance(just to make sure they are financially solvent) and then their last month's tenancy is rent free. This is liked by the tennants, as no rent to pay in the last month and by landlords, as this tends to stop the practice of the tenant disappearing leaving one months rent owing.
This tip is from someone who has never taken a deposit, just used this system sucessfully for the last few years

if there last months tenancy is free what happens when they vacate the place and you find they have damaged something - what do you do?

Emma79

Thought I'd "bump" this thread up, as I'd be interested to know the answer to follyfoot's question....

thesaint

If there is a bad tenant, they will refuse to pay rent for however long it takes to use up their advance rent, deposit and more.

There is no system in place that can stop this practice, even if you were to go to court and win, there is little likelihood of ever seeing the money owed.