Damage deposit from DSS tenants?

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13:27 PM, 24th October 2016, About 8 years ago 16

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Getting a deposit from tenants with no assets has always been a problem, but for those of us who let to DSS tenants we are left open to the risk of criminal damage and rent arrears if the tenant turns out to be a rogue/bad tenant. For landlords who let to professional tenants, this is not such a problem as a deposit is taken and the landlord can recover debts via seizing goods (via bailiffs) or an attachment of earnings order. However, if the tenant is unemployed and has no assets, then such recovery is not possible, so I was wondering if there is some way of taking a deposit that is paid over time? – Let me explain:

Could a property be let to a DSS tenant on the basis (written into the AST) that any amount received from the tenant, via any source (Housing Benefit, DWP deduction, cash payment, third party, etc) would be held as a payment on account towards a deposit until it reaches £1000 at which point it would become a deposit and be paid into an approved deposit protection scheme? Such a deposit would be repayable to the tenant upon the ending of the tenancy less any amount for damage or rent arrears etc.

If this could be done, the tenant would have paid a refundable deposit which the landlord would have protected in the DPS (or similar scheme), but the tenant’s rent account would be showing as being in arrears (as the Housing Benefit received would have been used towards the deposit). The Housing Benefit Department always say (when a tenant spend the money instead of paying the rent), that it is the tenant’s choice how they use the HB money, so if they agree to use it as a deposit then that is their Right.

This would create a situation whereby if the tenant does not cause damage then the deposit will be refunded at the end of the tenancy. However, if the tenant does cause damage or needs to be evicted due to anti-social behaviour, there would be arrears on the account so they could be given 14 days notice under s8 ground 8, and could therefore be evicted quicker (i.e. quicker than using the s21 process), and the deposit could be used towards the cost of repairing any damage done.

Just wondering if this could be done, and if not, why not?

Robert

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Comments

Seething Landlord

13:46 PM, 25th October 2016, About 8 years ago

Reply to the comment left by "Romain Garcin" at "25/10/2016 - 12:55":

Agree entirely and it follows that any part of the deposit that IS received must be protected. That is why it is necessary to be absolutely clear whether money received is deposit or rent. It remains my view that any money received must be allocated first to the deposit and only when that has been paid in full can further payments be allocated to the rent account.

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Romain Garcin

14:11 PM, 25th October 2016, About 8 years ago

Reply to the comment left by "Seething Landlord" at "25/10/2016 - 13:46":

If both deposit and rent are payable and the tenant issue a payment without specifying how to allocate it (unless perhaps the amount makes it clear) then I would think it is for the landlord to decide how to allocate it.

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Mike Sosner

13:48 PM, 30th October 2016, About 8 years ago

Hi Robert,

With reference to Jonathan’s comment I think you’ll find many Local Authorities are lately predisposed towards facilitating social housing tenants going into private rented accommodation by a number of mechanisms since legislation changed last April to allow LA’s to dispense their of Housing Obligation into the Private Sector.

In my area of South West Wales there are a number of schemes, one being the Discretionary Housing Payment (DHP) Jonathan’s tenant took advantage of. Also Swansea based charity called “The Wallich” operates within the County as a Bond Board, offering the landlord a bond certificate. Over two years they will draw from the tenant a “sub” so that by the end of the period the tenant holds a cash bond, perhaps something like your suggestion (but you, the landlord, doesn’t have to manage it). There is also a Private Rented Sector (PRS) “cash” account for Housing Action to draw from, and on a couple of occasions I have had bond and a month’s rent in advance from the Homelessness Prevention Fund for example, where a family has fallen by good reason into reduced circumstances and maybe been put up with relatives. Always insist on a month’s rent in advance as per to your usual requirements. On one exceptional occasion I had a bond and month’s rent in advance from one local authority (out of which the tenant was moving) and the usual rent-in-arrears LHA payment following on from a second LA (that he moved to) but who didn’t provide the advance payments.

So you see there are schemes in place Robin. Give me a call during the week (on 01792 468200) if you’d like to chat about my experiences...

With good regards, from

Mike

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14:11 PM, 1st November 2016, About 8 years ago

Beware taking bonds as deposits from charities and other organisations. The local combined churches did this around here. Everything was fine until this church charity suddenly closed down leaving all of us Landlords with worthless bits of paper.

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ameliahartman

4:59 AM, 5th June 2019, About 6 years ago

Obfuscated Data

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Jonathan Clarke

7:25 AM, 5th June 2019, About 6 years ago

Reply to the comment left by ameliahartman at 05/06/2019 - 04:59
Not to take a deposit is sometimes a sound strategy but more for the experienced landlord . Tenant selection is key here . If they are in the trades there is a balance to be had between them getting together a deposit or instead utilising their skills to enhance and add value to the property for free. Free labour can outweigh the cost of a deposit and enhance your properties value and also create a better living environment for them

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