AST deposit exceeding one month's rent- effect?

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  • AST deposit exceeding one month's rent- effect?

    Hihi

    If someone pays say 4 months deposit for a 12 month AST then am I right in thinking it's not a 'normal' deposit. Apologies for being vague I just don't know what the deposit becomes or is in such a case if that makes any sense!

    I would be grateful if some wise folks could clear up my confused mind!

    Housed

  • #2
    Originally posted by housed View Post
    If someone pays say 4 months deposit for a 12 month AST then am I right in thinking it's not a 'normal' deposit.
    The issue is whether or not this constitutes a "premium" and there appears to be disgreement on this forum about whether that is the case or not.

    Searching the archives for 'premium' may help.

    Comment


    • #3
      Even if it is a premium, why is that a problem?
      JEFFREY SHAW, solicitor [and Topic Expert], Nether Edge Law*
      1. Public advice is believed accurate, but I accept no legal responsibility except to direct-paying private clients.
      2. Telephone advice: see http://www.landlordzone.co.uk/forums/showthread.php?t=34638.
      3. For paid advice about conveyancing/leaseholds/L&T, contact me* and become a private client.
      4. *- Contact info: click on my name (blue-highlight link).

      Comment


      • #4
        Originally posted by jeffrey View Post
        Even if it is a premium, why is that a problem?
        Does a premium not confer any more rights to the tenant?

        Comment


        • #5
          See http://www.landlordzone.co.uk/forums...ad.php?t=13061- my post #3.
          JEFFREY SHAW, solicitor [and Topic Expert], Nether Edge Law*
          1. Public advice is believed accurate, but I accept no legal responsibility except to direct-paying private clients.
          2. Telephone advice: see http://www.landlordzone.co.uk/forums/showthread.php?t=34638.
          3. For paid advice about conveyancing/leaseholds/L&T, contact me* and become a private client.
          4. *- Contact info: click on my name (blue-highlight link).

          Comment


          • #6
            thanks for the responses, it wasn't something that had come up before so I was rather clueless to say the least.

            Comment


            • #7
              Originally posted by jeffrey View Post
              ..sorry, but I find that post hard to read/understand. Can you summarise it for me in plain english?

              Comment


              • #8
                Result of analysis: there is no real bar to L taking deposit in excess of one month's rent, even if it counts as a premium.
                JEFFREY SHAW, solicitor [and Topic Expert], Nether Edge Law*
                1. Public advice is believed accurate, but I accept no legal responsibility except to direct-paying private clients.
                2. Telephone advice: see http://www.landlordzone.co.uk/forums/showthread.php?t=34638.
                3. For paid advice about conveyancing/leaseholds/L&T, contact me* and become a private client.
                4. *- Contact info: click on my name (blue-highlight link).

                Comment


                • #9
                  Originally posted by jeffrey View Post
                  Result of analysis: there is no real bar to L taking deposit in excess of one month's rent, even if it counts as a premium.
                  But does the charging/taking of a premium change the status, rights or powers of either tenant or landlord?

                  Comment


                  • #10
                    I cannot see that it does. What had you in mind, please?
                    JEFFREY SHAW, solicitor [and Topic Expert], Nether Edge Law*
                    1. Public advice is believed accurate, but I accept no legal responsibility except to direct-paying private clients.
                    2. Telephone advice: see http://www.landlordzone.co.uk/forums/showthread.php?t=34638.
                    3. For paid advice about conveyancing/leaseholds/L&T, contact me* and become a private client.
                    4. *- Contact info: click on my name (blue-highlight link).

                    Comment


                    • #11
                      Originally posted by jeffrey View Post
                      I cannot see that it does. What had you in mind, please?
                      For example, you mention assignment and subletting.
                      Also, do the notice periods change?

                      Comment


                      • #12
                        I always take one and a half month's rent as deposit. I don't think there is anything odd about this. Four month's would seem a bit excessive tho.
                        Mrs Jones
                        I am not an expert - my posts are my opinion and should not be taken as fact!!

                        Comment


                        • #13
                          Originally posted by SEB View Post
                          For example, you mention assignment and subletting.
                          Also, do the notice periods change?
                          If a written AST contains an explicit bar on assignment/subletting, the fact that a large deposit is deemed (and treated as) premium is irrelevant; it's just that the implied terms would have differed.

                          And the statutory Notice periods (in 1988 Act) are unaffected too.

                          Why do people have this phobia about larger deposits? Do they know something that's escaped my knowledge (possible)? Please tell.
                          JEFFREY SHAW, solicitor [and Topic Expert], Nether Edge Law*
                          1. Public advice is believed accurate, but I accept no legal responsibility except to direct-paying private clients.
                          2. Telephone advice: see http://www.landlordzone.co.uk/forums/showthread.php?t=34638.
                          3. For paid advice about conveyancing/leaseholds/L&T, contact me* and become a private client.
                          4. *- Contact info: click on my name (blue-highlight link).

                          Comment


                          • #14
                            I think that I might now know why AST landlords are queasy about this topic, e.g. the treating of an unusually-large deposit as a premium.

                            Under s.119 of the Rent Act 1977, it was a criminal offence to require a premium as a condition of grant/renewal/continuance of a protected tenancy. I wonder whether a folk-memory of this still daunts Housing Act 1988 landlords (AST/SAT).
                            JEFFREY SHAW, solicitor [and Topic Expert], Nether Edge Law*
                            1. Public advice is believed accurate, but I accept no legal responsibility except to direct-paying private clients.
                            2. Telephone advice: see http://www.landlordzone.co.uk/forums/showthread.php?t=34638.
                            3. For paid advice about conveyancing/leaseholds/L&T, contact me* and become a private client.
                            4. *- Contact info: click on my name (blue-highlight link).

                            Comment


                            • #15
                              Originally posted by jeffrey View Post
                              I think that I might now know why AST landlords are queasy about this topic, e.g. the treating of an unusually-large deposit as a premium.
                              My own 'knowledge' of this comes only from reading this forum. I wonder though, is it a Scottish issue maybe? See here:http://scotland.shelter.org.uk/getad...IGN_NAME=print

                              Comment

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