Alternatives to taking a deposit

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    Alternatives to taking a deposit

    I've been wondering if there are any alternatives to not taking a deposit on a AST.

    I don't have any problems but the the costs, admin and time taken to comply with all the requirements that taking a deposit require, and ensuring they are carried out at the right time, has left me wondering if there are any alternatives.

    The continuous treadmill of government regulations (most of which are defectively thought out and arrived at, along with weak/spurious reasons for their introduction) and which is on an increasing incline as well as clearly being designed to push out small private landlords, are steadily increasing the costs, time and hassles for private landlords who don't have the ability to reduce their costs per home/letting, as built-to-rent operators can.

    This thought is also, perhaps, to give me an edge in attracting tenants, as my area seems to be competitive.

    I don't have any concerns about serious damage or furniture/items going missing, as I still plan to do inventory check ins/outs. Plus, its rare that I have had any trouble with tenants over many years (for anything) or needed to deduct much from deposits.

    #2
    There are insurance schemes which are targeted at agents, where the tenant pays a premium to avoid a deposit.

    There is the option of not taking a deposit at all. Most deposits are returned in full and, when they're not, often they're nowhere near the value of the damage.

    Or just use the custodial schemes.
    Very little admin (although a lot of printing), but it's only additional to the admin you have to do anyway.
    And it gives some idea that the tenant has an income.
    When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
    Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

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      #3
      Make an assessment from your own experience of the damage & length of stay a particular tenant is likely to inflict. Divide one number by the other, and add that amount to the rent.

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        #4
        Originally posted by jpkeates View Post
        There are insurance schemes which are targeted at agents, where the tenant pays a premium to avoid a deposit.
        These can only be offered as alternatives to a deposit. If the tenant chooses to pay five weeks' deposit, they cannot be forced to use the insurance policy, instead.

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          #5
          Increase the rent.

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            #6
            As above - no deposit and increase the rent by 10%

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              #7
              If I increase the rent, I am thinking to divide the normally collected deposit (5 weeks rent) into the number of months on the original tenancy period (usually 6 months), and then add that to the monthly rent. This would give me the deposit amount during the initial term as a reserve. If so, should I state the 2 rent amounts on the tenancy agreement (6 months at £X, then ongoing/new tenancy at £Y?

              Also, do I still need to provide new tenants with a copy of the CP12? Any other paperwork/requirements?

              Comment


                #8
                Originally posted by Mogino View Post
                If I increase the rent, I am thinking to divide the normally collected deposit (5 weeks rent) into the number of months on the original tenancy period (usually 6 months), and then add that to the monthly rent. This would give me the deposit amount during the initial term as a reserve. If so, should I state the 2 rent amounts on the tenancy agreement (6 months at £X, then ongoing/new tenancy at £Y?
                No, just do it as I said:

                Originally posted by JK0 View Post
                Make an assessment from your own experience of the damage & length of stay a particular tenant is likely to inflict. Divide one number by the other, and add that amount to the rent.
                Originally posted by Mogino View Post
                Also, do I still need to provide new tenants with a copy of the CP12? Any other paperwork/requirements?
                CP!2, How to rent booklet, EPC. I suggest you append these to the tenancy agreement and have tenant sign & date every page.

                Comment


                  #9
                  Originally posted by JK0 View Post
                  Make an assessment from your own experience of the damage & length of stay a particular tenant is likely to inflict. Divide one number by the other, and add that amount to the rent.
                  I don't know how to calculate how much to take as a deposit. I've never had any actual damage beyond typical wear & tear (a relatively few items have gone missing over the years but none of any value).
                  The stay of any tenant is unknown beyond the initial 6 months term, but over the last 4-5-6 years, no-one has left after the initial 6 months.

                  Originally posted by JK0 View Post
                  CP!2, How to rent booklet, EPC. I suggest you append these to the tenancy agreement and have tenant sign & date every page.
                  Why must I provide those documents if I am not taking a deposit?

                  I think increasing the rent over the initial 6 months to arrive at what would be the deposit and then reducing the rent thereafter to what it would have been, seems to be a lot easier.

                  Comment


                    #10
                    Originally posted by Mogino View Post

                    I don't know how to calculate how much to take as a deposit. I've never had any actual damage beyond typical wear & tear (a relatively few items have gone missing over the years but none of any value).
                    The stay of any tenant is unknown beyond the initial 6 months term, but over the last 4-5-6 years, no-one has left after the initial 6 months.
                    I already told you how to calculate it.

                    Originally posted by Mogino View Post
                    Why must I provide those documents if I am not taking a deposit?
                    Oh, you're quite right. Silly of me. There's no need to bother with any of that.


                    Originally posted by Mogino View Post
                    I think increasing the rent over the initial 6 months to arrive at what would be the deposit and then reducing the rent thereafter to what it would have been, seems to be a lot easier.
                    It's illegal, but as you know so much better, crack on & do what you suggest.

                    Comment


                      #11
                      Originally posted by Mogino View Post
                      If so, should I state the 2 rent amounts on the tenancy agreement (6 months at £X, then ongoing/new tenancy at £Y?
                      No.
                      If you do that, then the tenant fees act says that the amount X-Y for the first 6 months is a prohibited payment.

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                        #12
                        Originally posted by Mogino View Post
                        Why must I provide those documents if I am not taking a deposit?
                        .
                        Because it is the law.

                        Comment


                          #13
                          Originally posted by Mogino View Post
                          Why must I provide those documents if I am not taking a deposit?
                          Because, if you don't, you're breaking the law and won't be able to serve a valid s21 notice.
                          I think increasing the rent over the initial 6 months to arrive at what would be the deposit and then reducing the rent thereafter to what it would have been, seems to be a lot easier.
                          And that is also illegal.
                          When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
                          Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

                          Comment


                            #14
                            So, just increase the rent is the only solution?

                            Comment


                              #15
                              If you can obtain a higher rent, you should probably always do that anyway.
                              The tenant is liable for anything the deposit would cover whether one exists or not, and you can always try and recover from them after the end of the tenancy.
                              When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
                              Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

                              Comment

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