Would I be foolish not to take a deposit?

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    Would I be foolish not to take a deposit?

    Hi,

    I have run a search but can’t find the answer to this question so I hope it’s ok to ask.

    I’m trying to let out my property for the third time now so I do have some hands-on experience and have also learned loads from this site. Thankyou.

    A friend has some friends who are interested in renting and are viewing this week. I understand they do not have any savings. (Long story-sounds legit.) They are both working so can afford the rent but I’m anticipating them asking me if they can move in without paying a deposit and I want to be prepared. From reading many threads on this site the message is coming across that the DPS, which I used last time round, comes down so heavily on the side of the tenant that the LL has a headache and a half trying to make a claim for loss of rent / damage to property anyway.

    Could I have some feedback on this please?

    #2
    Originally posted by Hannah7 View Post
    Hi,

    I have run a search but can’t find the answer to this question so I hope it’s ok to ask.

    I’m trying to let out my property for the third time now so I do have some hands-on experience and have also learned loads from this site. Thankyou.

    A friend has some friends who are interested in renting and are viewing this week. I understand they do not have any savings. (Long story-sounds legit.) They are both working so can afford the rent but I’m anticipating them asking me if they can move in without paying a deposit and I want to be prepared. From reading many threads on this site the message is coming across that the DPS, which I used last time round, comes down so heavily on the side of the tenant that the LL has a headache and a half trying to make a claim for loss of rent / damage to property anyway.

    Could I have some feedback on this please?
    You seem to want us to tell you that it will be fine and it's not worth insisting on a deposit, but I'm afraid I cannot do that. Its your decision, but in my experience, if the Ts really want a property, they will find a deposit somehow, even if it means getting an overdraft or a loan from family or their employers. Even a couple of hundred pounds is better than nothing. If they are unwilling/unable to find this amount, I would question their commitment and/or their ability to afford the rent. Have you run the necesssary credit checks on them and secured a guarantor*? Renting to friends of friends can be fraught - you feel under pressure to grant favours which you wouldn't, normally - but for what? There is nothing in it for you!

    *If not, you could be walking blindfolded into penury.

    The competence or otherwise of the DPS is a red herring, really.
    'Pause you who read this, and think for a moment of the long chain of iron or gold, of thorns or flowers, that would never have bound you, but for the formation fo the first link on one memorable day'. Charles Dickens, Great Expectations

    Comment


      #3
      Be professional and only rent to friends under the same conditions as you would rent to anyone else. Thats just my view.
      My posts are my opinion only and are not intended as professional advice.

      I do not claim to be an expert of any sort. I may well be totally wrong, do not rely on my contribution to this forum in any way whatsoever.

      Comment


        #4
        Deposits

        Always take a deposit, whatever the situation, at least the equivilant to 1.5 months rent. AND dont forget to register it with an approved Deposit Scheme.

        Comment


          #5
          Originally posted by estateagent View Post
          at least the equivilant to 1.5 months rent.
          I do not think that is necessary, unless the property is full of expensive antiques or something. In some ways the deposit is taken more as a token of the Ts good faith than as a guarantee that LL will not be out of pocket if T trashes the place.

          A deposit equivalent to one month's rent is more the norm in some parts of the country.
          'Pause you who read this, and think for a moment of the long chain of iron or gold, of thorns or flowers, that would never have bound you, but for the formation fo the first link on one memorable day'. Charles Dickens, Great Expectations

          Comment


            #6
            Originally posted by mind the gap View Post
            I do not think that is necessary, unless the property is full of expensive antiques or something. In some ways the deposit is taken more as a token of the Ts good faith than as a guarantee that LL will not be out of pocket if T trashes the place.
            I'd agree with that, except I still ask for 1.5 months as it at least means you lose the symmetry of tenant giving one month's notice to quit and having exactly one month's worth or rent apparently paid up front. I think they are much less likely to withhold the final months' rent if they've paid 1.5 months as a deposit, and I don't believe the deposit protection laws have made any difference to the likelihood of it happening.

            And if they do withhold the final months' rent, then at least you've got 2 week's worth left!

            Comment


              #7
              Originally posted by Ericthelobster View Post
              I'd agree with that, except I still ask for 1.5 months as it at least means you lose the symmetry of tenant giving one month's notice to quit and having exactly one month's worth or rent apparently paid up front. I think they are much less likely to withhold the final months' rent if they've paid 1.5 months as a deposit, and I don't believe the deposit protection laws have made any difference to the likelihood of it happening.

              And if they do withhold the final months' rent, then at least you've got 2 week's worth left!
              I agree. ALWAYS take a deposit, otherwise T has no incentive whatsover to even remove rubbish or clean. I usually take 1mth +£100 but will up it if references or any other factor comes into play (like pets, can my parents visit for a month? Can my partner stay over every w/e -i.e. move in with me - happens on room only lets. etc) Highest dep i have taken 3x mth.
              It is not uncommon for me to take 6 months rent up front AND a 2mth deposit.

              NO deposit = NO way hose.
              A pessimist sees the difficulty in every opportunity; an optimist sees the opportunity in every difficulty.
              W.Churchill

              Comment


                #8
                I very rarely take money off my tenants' deposits, partly because I am quite generous about what is wear and tear (I think if you are a landlord/lady you have to expect some expense between tenancies) and partly because I have never had any really bad tenancies.

                No really bad tenancies is a mixture of luck and a good vetting procedure.

                But I would NEVER not take a deposit. You are giving them licence to wreck the place. The deposit is an incentive to look after the property. You could take a lower than normal deposit if they are skint. I wouldn't though as skint people are more likely to struggle paying the rent as well.

                On the other hand I had a letting agent who decided to start charging me £120 for the inventory despite me having a fully managed service from him. (Actually half of it was charged to the tenant - but indirectly that is a cost to me). That really annoyed me as you could argue that a cost of £120 every time there is a tenant change over is more expensive than not having an inventory. Needless to say I don't use that letting agent any more. I have given up on using an agent, they are good for saving time but the costs were spiralling, what with all the void periods and rubbish prices for repairs.
                I'm trying to raise awareness of Myotonic Dystrophy, Pre-implantation Genetic Diagnosis (PGD) and In vitro fertilisation (IVF). Follow my PGD blog and please pass it on to any one you know who has an interest in PGD or IVF.

                Comment


                  #9
                  I suspect the reason you ask the question is because the prospective tenants are friends of friends, right?

                  If so, you shouldn't really let that sway you one way or the other.

                  Don't expect them to be good tenants just because of that. Carry out your normal vetting, treat the tenancy as you would any other. If, when things go wrong, don't expect sympathy or help from the friends who introduced them in the first place.

                  Take a deposit - it would be unwise not to. That way, they have something invested in the tenancy and would therefore be more likely to play ball properly. And you've got something to hold on to for dilapidations if need be.

                  Comment


                    #10
                    as an alternative to a deposit....

                    you could ask the intending tenants if their mum/dad or other person preferably of means would stand guarantor. There have been occasions I have let to people without deposits. Amazingly in some areas the local council have schemes whereby they agree to guarantee a deposit. They don't pay it across to the landlord when the tenancy commences but if it all goes pear shaped you call on the council to cough up, and, eventually, they do.

                    Best of luck

                    Comment


                      #11
                      Originally posted by quarterday View Post
                      you could ask the intending tenants if their mum/dad or other person preferably of means would stand guarantor. There have been occasions I have let to people without deposits. Amazingly in some areas the local council have schemes whereby they agree to guarantee a deposit. They don't pay it across to the landlord when the tenancy commences but if it all goes pear shaped you call on the council to cough up, and, eventually, they do.

                      Best of luck
                      I have heard of this scheme, too, but I got the impression that (in Cumbria at least), it only applies to people on benefits of one kind or another, not fully-employed couples who are just 'skint'.
                      'Pause you who read this, and think for a moment of the long chain of iron or gold, of thorns or flowers, that would never have bound you, but for the formation fo the first link on one memorable day'. Charles Dickens, Great Expectations

                      Comment


                        #12
                        Originally posted by mind the gap View Post

                        I have heard of this scheme, too, but I got the impression that (in Cumbria at least), it only applies to people on benefits of one kind or another, not fully-employed couples who are just 'skint'.
                        MTG, it is usually for those on benefits or who have become homeless (not intentionally). The T would be vetted and need to meet certain criteria to qualify.

                        I've taken on some tenants on the scheme with mixed success.

                        But be wary.

                        Originally posted by quarterday View Post
                        Amazingly in some areas the local council have schemes whereby they agree to guarantee a deposit. They don't pay it across to the landlord when the tenancy commences but if it all goes pear shaped you call on the council to cough up, and, eventually, they do.
                        The usual term for this is "paper bond", and in some councils, not worth the paper it is written on. I still have one claim outstanding since July!! If the LL misses out any of the pre-requisite conditions, no matter how insignificant, they will wriggle and squirm and try not to pay out, just like insurance companies do. So, now, I don't accept paper bonds from that council!!
                        Last edited by havensRus; 15-12-2009, 08:28 AM. Reason: typo

                        Comment


                          #13
                          Would you be foolish? I think you would be, yes.

                          The whole point of conning people is to sound legit!

                          Comment


                            #14
                            If there's no deposit, consider Tenant Rent Insurance (at T's cost) instead.
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                            Comment


                              #15
                              Originally posted by Hannah7 View Post
                              Hi,



                              A friend has some friends who are interested in renting and are viewing this week. I understand they do not have any savings. (Long story-sounds legit.) They are both working so can afford the rent but I’m anticipating them asking me if they can move in without paying a deposit and I want to be prepared. From reading many threads on this site the message is coming across that the DPS, which I used last time round, comes down so heavily on the side of the tenant that the LL has a headache and a half trying to make a claim for loss of rent / damage to property anyway.

                              Could I have some feedback on this please?
                              You should always take a deposit and register it in a scheme, at least a month, if they cannot afford a deposit as others have said, let them borrow it from a relative. If no one else has confidence in them, why should you? This may sound harsh, it's just my opinion.

                              Comment

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