Student Landlords/Agents – When do you register a “new” deposit?

Hi Mary

My proposal is to get an insurer to underwrite the cost and effort of making a claim against a tenant for all the examples you have cited. My vision is that it would be like RGI, i.e. the claim is handed over to the insurance company and they go through the courts to recover their money and costs from the tenant. Therefore, there would still be an incentive for a tenant to behave. Arguably this incentive is bigger as tenants know that landlords don't like hassle in the main but if they realise they are fighting with an insurance company making a claim against them they are either going to have to pay up for any missed rent or damage PLUS COSTS or behave in a tenant like manner in the first place.

Perhaps I am dreaming to think that such a policy could be arranged for no more that the cost of a deposit protection with MyDeposits but perhaps not for the reasons I gave in my last post on this thread.

With regards to Memberships, these are all very valid points. Do you not think different categories of membership for Private Members, Business Members and Honorary Members would be a good idea anyway though?

Mark what would a business member mean? What would I be as a landlord?

Mark what would a business member mean? What would I be as a private landlord?

Hi Mary, as described in my comment above for business member. Private Member or Honarary member being the two alternatives, the latter being by invitation only

Mary I don't agree on the holding deposit/retainer issue and think the Jury is still very much out on that one, as it is all part of the is it rent or a deposit etc debate.

Use the D word and I think you are sunk anyway as you are defining it as a deposit anyway.

Call it anything else you like but the whole issue is whether or not it is money held in contemplation of the discharge of a future obligation on the part of a tenant.

I would suggest that it is - if the 'holding deposit' is what then becomes the actual deposit I'd be certain that it is and should have been protected within 30 days of receipt.

If it is a smaller sum, say £150 or so, and in effect is an apllication fee, why not simply call it that, or an administration fee, if in reality that is what it is and it could be legally argued to be so.

Deposits at all - I agree as the Landlord doesn't have control what is the point.

Multiple schemes a good thing - not when they cause confusion with multiple rules, procedures, practices and advice. All that was ever needed was one custodial well organised, thought out and run scheme, properly funded with Statutory control over fees - all problems solved and all money safe because the landlord or agent isn't holding it which surely is the whole point of 'protection'?

Have multiple custodial schemes I suppose if you like, but there really is no need for more than one to achieve the purpose it exists for, with control on fees. In fact let the scheme keep the interest instead of paying it out (such as it is at the moent) to help suppress fees. They aren't large anyway

If the holding deposit is say £700 or anywhere near a month's rent and converted to be the deposit on commencement then inmy view it is a deposit from the time it was first held and should be treated as such.

After speaking to mydeposits about this on various occassions I came to the conclusion that they seem to change their advice every year.

I used to protect the deposit within a few days of when the tenancy was signed regardless of whether I had received all the money or if it was already protected for the remainder of the current tenancy. I was never very comfortable with double protecting or advance protection as it seemed to leave me exposed to people claiming money I had never received.

Last year the mydeposits helpdesk suggested calling whatever was initially paid a 'non refundable reservation fee'. That money could then be described on the tenancy agreement as part of the first months rent. The deposit could then be made due at any convenient time before the tenants moved in. In the case of the same tenants using the existing deposit it would be the point at which the existing deposit was unprotected (and immediately re-protected). For totally new tenants a few days before the tenancy commences seems ideal.

Has anyone else been told this is an acceptable method?

Jo

I've never heard that but it is complete and utter nonsense.

Apart from anything else under various consumer etc law you cannot make a deposit for ANYTHING completely non-refundable becaue it is a payment made as part performance of a contract and made in contemplation of specific performance.

In other words the deposit is holding something for you (forget whether the supplier makes it compulsory or whether you offer to pay, doesn't change the legal status of the payment) .

Specific performance is completion, or in a tenancy execution and the commencement of occupancy etc.

In letting terms all that can ever be rateined from any deposit is reasonable costs, such as referencing, and reasonable out of pocket expenses for an agent (Landlords would possibly find this bit harder to argue if challenged).

Many people don't challenge all their deposit being retained, they should do all that is needed is a call to TSO or of course OFT.

The second point is this is again typical of any TDP scheme who should just stick to what they are charged to do, which is protect money. Nowehere in the legislation does it say they have to provide a legal helpline, or give advice.

They don't even understand their own rules usually, staff will change and so will advice.

When he was at TDS Lawrence Greenbergh used to refuse to somment even on their own rules half the time, and flatly refused ever to comment on legislation. Very wise.

@Industry Observer - "curve ball" coming your way!

Property Developers often charge non refundable reservation fees, why can't landlords/agents? I'm talking about England and Wales of course, as we know "Premiums" are illegal in Scotland.

Mark

Since when do two wrongs make a right?

The issue in lettings is the size of the payment. It doesn't matter what you call anything (as Mary says if it looks like a duck and quacks it probably is!!) it is what it is.

If the payment is only say £100 or £150 you might get away with what you call it, but if it is a deposoit it is still a deposit.

I see no way that taking say £800 and calling it something, then on completion converting it into a deposit gets you off lack of earlier protection hooks. And post Localism Act an earlier suggestion from TDS about paying it back and then re-taking it has gone out of the window as well.

Reservation fees with builders etc often relate also to securing the particuler unit that you want. My coimments relate to a deposit which had a special status and legal standing befoore TDP, never mind after!!

I agree with IO the use of the word Deposit, when the money is held as a Retainer pending completion of paperwork, AST, references, guarantees etc, is dangerous. If it is a Retainer it should be called a Retainer. I also agree that if the amount is for more than it would cost the landlord to remarket the property, cover loss of rent during that time, reference fees, reasonable admin charges where the tenant has backed out or where the references don't stack up or the guarantor does not stack up or sign up, it is also unlikely that a landlord would get away with calling it a retainer. If the amount taken is receipted as a non-refundable retainer and is reasonable, in my opinion, this is transparant and the tenant is aware before he pays that in the event that the tenancy agreement is not signed he will lose the money.

A Deposit which is taken to cover losses or damages during the tenancy cannot be a Deposit until the tenancy is signed because until that point there are no potential losses or damages to be covered.

If there is going to be a long period of time between the agreement to let and the signing of the AST, as with students, I always take( and receipt) a non-fundable retainer of £50 per person which amounts to £250 for the property. Once the AST is signed I make this part of the first months rent and take the full Deposit and balance of the first months rent in cleared funds before the AST is signed (usually on the same day unless the tenant wants to pay by bank transfer) and the day that I receipt it as paid (or the date that it hits my account) becomes the start of the 30 days I have in which to protect it.

The only time I use the word Deposit is when the money I take is going to "cover my back" for damages or losses during the tenancy.

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