When and how to protect an AST deposit?

Collapse
X
 
  • Filter
  • Time
  • Show
Clear All
new posts

    When and how to protect an AST deposit?

    My Agents have found me a new tenant for one of my properties, great. However the tenant doesn't want to sign the AST and occupy the property until 14th May. I'm ok with this but the agent has taken the damages deposit already to cover me if the tenant doesn't eventually sign. Do I need to protect this deposit now or when an AST is signed? I'm not shirking my responsibilities but I can't see the point in protecting the deposit when I haven't even got an AST. I may just as well give the deposit back. Are there any legal obligations on me seeing as a deposit has been accepted or would I be ok to hand it back to the tenant until he signs?

    #2
    Anything in the AST that relates to deposit cannot, by definition, operate until the AST commences. Why not offer to enter into AST now (ie both parties execute) but state commencement date as 14 May? That way you're both bound and the deposit clauses can operate from now, but rent won't commence until term commences.
    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


      #3
      The agent says the prospective tenant doesn't wish to sign the AST until 14th May for whatever reason he may have. That is why he took the deposit now in case I end up out of pocket if the tenant doesn't sign. I can't see however, that the DPS would ever award me any of the deposit as compensation if the tenant hasn't even signed an AST. Can this deposit be legally classed as a deposit if no contract has been signed? I would have been happier in all honesty if a deposit hadn't been taken at this stage but I can understand the agents reasons for doing so.

      Comment


        #4
        No problem, call it a holding deposit and then it doesn't come under the scheme. Your agents have effectively called it that by saying the deposit was taken against the possibility of the tenant not going ahead.

        Comment


          #5
          Originally posted by Tweedle Dum View Post
          The agent says the prospective tenant doesn't wish to sign the AST until 14th May for whatever reason he may have.
          I can't think of any reason other than he wants to hedge his bets and not commit himself yet, can you?

          Be aware that if he does back out, you can't simply hang on to the deposit in recompense, and the tenant may well be aware of that. AFAIK you could only change readvertising costs, so you'd be well out of pocket if he did a bunk at the 11th hour. I suppose it's only 3 weeks away, but I'd be very wary of turning away other good prospective tenants during that time.

          Comment


            #6
            I agree that I would have trouble holding onto the deposit if he backed out, other than outright stealing it. However, I feel that it does show a level of commitment on his behalf.

            Comment


              #7
              Holding deposits are usaully non-refundable if the the prospect defaults, and is also a lot less than the full damage deposit. By taking a full damage deposit your agent may have muddled the boundaries. Hence your fear of not being able to hang on to it. With a Holding-deposit you wouldn't have had any qualms about keeping it, if the tenant-to-be didn't sign the AST afterall.

              Sober

              Comment


                #8
                Who is liable to protect the deposit?

                In May, I needed to find some new tenants for my two bedroom flat and went to a (literally) High Street lettings agency, recommended by a number of business associates, on an introduction only basis. I am managing the flat myself. The tenants paid direct to the agency one months rent in advance and one months rent, representing a deposit.

                Whilst it is clear that the agency are in breach of their own contract which states that they will hand over all monies within fourteen days, I have a few questions, which those who are more experienced in these matters might be able to help me with:

                (1) The agency kept hold of the money, including the money which represents the deposit, for eight weeks before they handed over the balance to me. Are they liable to protect the tenants' deposit for the time that they were the custodian, or am I? (I suspect I am.)

                (2) The agency furnished my property, as the tenants wanted to move in straight away and I paid them £1300 for furniture later that day. Eight weeks later, when I received their statement, a "building fee" of £150 and an "arrangement fee" of £200 (£387 including VAT) was added to the cost of the furniture and deducted from the amount eventually paid over to me. They never notified me of these charges in advance, neither in the one telephone call in which I agreed to let them put the furniture in, nor in writing at all. Do they have any legal basis for making these charges?

                (3) Finally, the tenants which were found for my property are new to this country; they are respectively 18 and 23 years old and on temporary contracts in the agriculture industry. The agency never informed me of this, until I received copies of their references (all of which came from just one source, their employer) and identity information, some four days after the tenants moved into my property. With this documentation was a letter from the agency, acknowledging receipt of two letters I had sent them, stating that they were not to release the keys to my property, until I had sight of the references. Nevertheless, the agency did release the keys and even (somewhat stupidly) acknowledged in writing that they had done so in contravention of my instructions. If anything goes wrong with these tenants, are they liable?

                Thus, I was bounced into accepting these tenants, probably so that the agency could make their fee. Had I known of the temporary nature of the tenants employment, I would never have agreed to let them move into my property.

                I am relatively new to the buy to let business (three years) and very new to this forum and I am thus probably over cautious and certainly prone to attention to detail. I'd appreciate any advice the more experienced landlords might be able to offer. I did conduct a search before creating this post and couldn't find anything on this topic, so please accept my apologies if this is located elsewhere and for the long post!

                Thanks.

                Comment


                  #9
                  (1) Between you and T, you are responsible for deposit protection. Between you and Agent, A is responsible. Eight weeks is excessive delay in releasing funds.
                  (2) The fees are unlawful unless A told you in advance and incorporated "fees" requirement in agency contract with you. "Usual" or "policy" might be claimed as A's reasons but that claim is cobblers.
                  (3) You appointed A on find-only basis. Agency contract ought to state for what A is responsible. Checking T's status is within this in most cases; provided that A did check, what is your real ground for grumbling at this stage?
                  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


                    #10
                    Originally posted by jeffrey View Post
                    ...

                    (3) You appointed A on find-only basis. Agency contract ought to state for what A is responsible. Checking T's status is within this in most cases; provided that A did check, what is your real ground for grumbling at this stage?
                    My real ground for grumbling is the appalling level of service received from the agency, their lack of communication and so on. All in all, they have been very sloppy in terms of their procedures and too keen to do things in a rush, so that they can make their money.

                    In this particular respect, had I been told by the Agency of the tenants circumstances, I would never have agreed to let my property to them as, in my opinion it is too high a risk. (There is never a problem with getting high calibre tenants in this area.) I am simply concerned about protecting my interests, should it all go wrong with these tenants further down the line, which is why I requested the Agency in writing not to release the keys until I had seen the information provided. They acknowledged receipt of my letter, in writing, but released the keys anyway.

                    Thank you for your response - it was very helpful.

                    Comment


                      #11
                      To protect deposit for new agreement??

                      I am increasing my current tenants' rent and am giving them a new 2 year AST agreement.

                      This tenant has been with me prior to April 2007, and so obviously I have not protected her deposit. Now I am giving her a new AST do I have to protect it?

                      Many thanks.

                      Comment


                        #12
                        Originally posted by Drowning in debt View Post
                        I am increasing my current tenants' rent and am giving them a new 2 year AST agreement.

                        This tenant has been with me prior to April 2007, and so obviously I have not protected her deposit. Now I am giving her a new AST do I have to protect it?

                        Many thanks.
                        Yes, because it's a new Agreement.
                        Alternative: let old one Agreement continue, increase rent by s.13 procedure, and then no need to protect the deposit.
                        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


                          #13
                          Private let - how do you protect deposit as private individual

                          Thankfully I am in the process of reletting which I am doing privately. Please could you advise on how I go about protecting the deposit and which scheme? Thank you.

                          Rachel

                          Comment


                            #14
                            check out www.depositprotection.com which is the custodial scheme that most private landlords use.

                            you register on-line then tsf the monies received within 14 days and you and the tenant are then issued with confirmation of its protection.

                            Comment


                              #15
                              More useful info can be found here:

                              http://www.direct.gov.uk/en/TenancyDeposit/DG_066383

                              Comment

                              Latest Activity

                              Collapse

                              Working...
                              X