Fair or unfair landlord treatment – We’re OUT!

The idea of having no deposit is potentially a good one. Even though I use an agent to source tenants and carry out checks I always meet a prospective tenant before signing them up. I find it easy to get a good or bad vibe from an applicant and base my decision on that vibe.
The deposit goes to the TDS so it no longer gives me any interest or cash flow benefit. I think it is quite feasible to charge top rate rent but offer no deposit to selected tenants. Then with property checks every 4 - 6 months and a top rate rent coming in the chances are that the landlord is covered to a reasonable degree and doesn't have to suffer the stress of a deposit dispute at the end. The tenant may pay a bit more rent but they will benefit by not having a deposit tied up in someone else's bank account and that will also encourage them to rent with you longer.
Also as long as there was a check in and out inventory what is to stop the landlord charging and outgoing tenant for damage.
Surely if a deposit doesn't exist then the rules relating to deposits do not exist?
Any ideas on the above?

Reply to the comment left by David Dorset at 20/03/2018 - 10:42
Exactly right David.
Think about it!!
I also take an administration fee (non returnable ) between £200- £250. Never had a quibble.

Reply to the comment left by Brian Jackson at 20/03/2018 - 11:06
Thanks Brian. It is a new concept for me. I am trying to find a downside but can't really.
Obviously an element of risk but then it seems less risk than dealing with the TDS and certainly less hassle.

We started not taking deposits about 4 years ago. We saw it as a marketing opportunity, along with no signing up fees too, and it allowed us to increase rents by about 10%. It saved almost £1k outlay for our typical renters plus the type of fees agencies charge them.
We knew from experience that most tenants have cash flow issues when moving (especially if they had a deposit tied up already) - so the message for no deposit was attractive. In return we get on average about £70 more for the house - which we keep to ourselves. Our average tenancy of 5 years means £4200 above normal rents over the period extra (plus % rises).
We also do not charge any fees for moving in - because it costs us next to nothing anyway. This also is a big saving on dealing with a letting agency. These 2 initiatives allow you to charge a higher rent. It also appeals to a renters mentality too. they focus on 'how much NOW?'
We also always insist on a home owing guarantor. No exceptions - ever. We meet them in the home and assess their character - and we tell them face to face what will happen if any monies are unpaid on exit. We scare them in a most polite way. Decent people do not want hassle or court action over their heads.
We do 4 monthly inspections and invite guarantors to them - and we update guarantors officially afterwards with pictures and any warning signs.
In summary, we dont get involved now with deposits and the hassles that go with them. It's another interfering, useless busybody out of our lives too.
I suppose we turned a problem into a marketing and sales advantage.

Reply to the comment left by Ken Smith at 20/03/2018 - 11:16
All very interesting Ken. Thank you for the post and the information.

Reply to the comment left by David Dorset at 20/03/2018 - 10:42
This Sounds Good to me David

Reply to the comment left by Brian Jackson at 20/03/2018 - 11:06
Another Good Idea - Thanks

Reply to the comment left by Ken Smith at 20/03/2018 - 11:16
Good Idea Thanks

That is an interesting solution Ken to the drawbacks of the deposit schemes. From your post it's clear your on top of vetting procedures to minimise the risk of problematic tenants. We are trying something similar at the moment with one of our properties having just signed up a tenant with no deposit but with a home owning guarantor tied in with the added safety net of a relatively inexpensive tenant insurance scheme. The tenant also has to pass the added vetting of the insurance. We will see how this pans out.

Reply to the comment left by Rob Spencer at 20/03/2018 - 12:02
I think you will be fine. To me, the guarantor is key. But leave them in no doubt about what they are taking on too.

They are usually mum or dad or grandparents and have to be a home owner. I'm generalising here but the ones we deal with seem to be cut from the same cloth as those people who believe in 'paying their way in life' and are petrified of authority intruding (courts) and spoiling their cosy lives.

A chat with them in their home (potential tenants there too) is where we demonstrate we are professional landlords, and where we also, politely, explain the consequences of non payment - has always done the trick.

The home visit gives you a good insight into how they live their lives etc. Bluntly - you can easily see if they are trash or not. If they are trash - then like a News of The World reporter, we make our excuses and leave shortly afterwards.

Rule No 1 Avoid scum.

We are essentially hammering home the importance of what they have taken on - and consequences of a breach of contract.

I often throw in a reference to 'The Sheriffs' or 'Can't Pay...' on TV as being what sometimes happens if guarantors try to evade their responsibilities. It definitely hits the mark. A fabricated story of us being stung once (we weren't) and how we successfully dealt with the guarantor culprit is always an attention grabber too.

Taking it further, if there are any rents that dont land in our account on the right day then we always inform guarantors. We tell tenants when they come on board, quite rightly, that we are honour bound to do so as the guarantor is potentially responsible for large sums of money. so tenants know if they are late with rent - mum or dad find out immediately.

The way I see it - it all makes sense and is reasonable - and it has always worked so far.

We have also taken thousands more in rents too.

We are currently selling up 19 houses - and have only had a few deposits to return and deal with from those 19 (pre-2013 tenancies).