RLA recommending no deposits

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    RLA recommending no deposits

    Ill post in more length later, but the RLAs residential landlords magazine has a paper addendum this month recommending landlords do not take deposits if it would be under £600. They say the insurance backed shemes are fundamentally flawed and the custodial scheme will be more attractive to tenants (and not attractive to landlords).
    Liability statement. My liability to you is not to exceed the amount you are paying for my recommendations or advice.

    I see a bright new future, where chickens can cross the road with no fear of having their motives questioned

    #2
    On final point: yes. For TDS to apply, letting has to be an AST (not an SAT or entirely outside 1988 Act). If the property is not the only or principal home of T (or of at least one of joint Ts), s.1(1)(b) of Act is not satisfied and letting -although nonetheless valid - is not within Act, so L can still receive deposits.
    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
      Originally posted by Wickerman
      more info (taken from halfway down the page)

      What hsould you do after April 6th?

      Do Not Take Deposits - if the value is less than £600 it simply isn't worth it.

      The bigger the deposit,m the GREATER YOUR RISK of loss. If you normally have minimal deposits with tenants, the cost, bureacracy AND RISK make the insured schemes very unattractive.

      Find alternative methods to control your tenants behaviour. There are several discussed in this article.

      If a deposit is essential - use the Custodial Scheme. It costs you nothing. But remember, your administration must be faultless.


      .. missed out a bit

      And Finally - RLA is challenging the government - for example for student tenancies - where the property is not the tenant's main residence. (Students will often be classed as resident with parents). In this case the TDS may not apply.
      Thanks for that, very useful. I had already decided not to take deposits from the people who live in my house in the UK as my son lives there too, so there is not a lot of risk of trashing/stealing. I only take £230 anyway. It is good to hear a professional body suggest this.

      I was thinking too that I will ask them to pay weekly as that way, if they flit, there will only be a week's unpaid rent.

      Does this sound reasonable?

      Comment


        #4
        I'm having trouble with the RLA advice to be honest.

        (By the way - note there's an error in Wickerman's transcription of their advice - see "DISPUTES" below):

        Originally posted by Wickerman
        Do Not Take Deposits - if the value is less than £600 it simply isn't worth it.

        The bigger the deposit, the GREATER YOUR RISK of loss. If you normally have minimal DISPUTES with tenants, the cost, bureacracy AND RISK make the insured schemes very unattractive.

        Find alternative methods to control your tenants behaviour. There are several discussed in this article.
        Well, the only method I can see is to use the new alternative scheme offered by www.tenantassure.com which gets a good plugging in the RLA article - can't see any other options mentioned?

        If a deposit is essential - use the Custodial Scheme. It costs you nothing. But remember, your administration must be faultless.
        OK, if for the sake of argument we say that the Custodial Scheme is the preferred option (and I would agree there) - then other than possibly using this new, untried-and-tested Tenantassure scheme, why on earth would I as a landlord not take a deposit and submit it to the Scheme? The worst that can happen is that I mess up my admin and the tenant gets all their deposit back despite having caused damage. How is that worse than if I hadn't taken a deposit at all? Why isn't it worth taking a deposit if the value is under £600?

        Comment


          #5
          Originally posted by jeffrey View Post
          On final point: yes. For TDS to apply, letting has to be an AST (not an SAT or entirely outside 1988 Act). If the property is not the only or principal home of T (or of at least one of joint Ts), s.1(1)(b) of Act is not satisfied and letting -although nonetheless valid - is not within Act, so L can still receive deposits.
          Jeffrey can you clarify this for me please. I am about to let to students on an AST and have asked for a deposit of £620. Would this come under the TDS as this is not their principal residence (what is the definitition of principal residence?)

          Regards

          Comment


            #6
            I really can't see the benefit in taking no deposit at all! The fact the tenant hasn't paid a deposit may make them more likely to be less careful with your decor. The worse that could happen having taken the deposit is that the scheme could find in favour of tenant when settling a dispute. I must say though that if I were a tenant who faced losing part of my deposit I could see no harm in forcing arbitration, wether I'd trashed the place or not.

            Comment


              #7
              tds whinges

              will u lot stop whingeing about the tds please? i am a consumer journalist who wrote about this scheme a year before it started, in the nationals etc. you should read up on it a bit more before the whining starts.
              this scheme does nothing to harm L.Ls unless they r unscrupulous. it just protects tenants' deposits from dodgey and greedy L.L. look up the new law.

              Comment


                #8
                RLA recommending no deposits

                Originally posted by jeffrey View Post
                On final point: yes. For TDS to apply, letting has to be an AST (not an SAT or entirely outside 1988 Act). If the property is not the only or principal home of T (or of at least one of joint Ts), s.1(1)(b) of Act is not satisfied and letting -although nonetheless valid - is not within Act, so L can still receive deposits.
                I rent rooms individually in my properties (which I do not live in). I get each individual to sign an agreement. I know that this offers me no protection but I haven't had a problem in all the years of being a landlord. They all move in at different times, with different dates on the agreements and there is no joint agreement - does this mean that the deposits I take are excluded from the TDS?

                Comment


                  #9
                  Originally posted by Ericthelobster View Post
                  OK, if for the sake of argument we say that the Custodial Scheme is the preferred option (and I would agree there) - then other than possibly using this new, untried-and-tested Tenantassure scheme, why on earth would I as a landlord not take a deposit and submit it to the Scheme? The worst that can happen is that I mess up my admin and the tenant gets all their deposit back despite having caused damage. How is that worse than if I hadn't taken a deposit at all? Why isn't it worth taking a deposit if the value is under £600?
                  As I understand it, if you mess up the admin the tenant is entitled to 3 times the value of the deposit in compensation. That's why.

                  Originally posted by tobylaura@btinternet.com View Post
                  will u lot stop whingeing about the tds please? i am a consumer journalist who wrote about this scheme a year before it started, in the nationals etc. you should read up on it a bit more before the whining starts.
                  this scheme does nothing to harm L.Ls unless they r unscrupulous. it just protects tenants' deposits from dodgey and greedy L.L. look up the new law.
                  See above. Scrupilous, honest landlords who make a small typo could be robbed of hundreds of pounds. Get your facts right.

                  Comment


                    #10
                    Students and TDS

                    Jeffrey et al ; can i join jai in his request for more info on students and TDS, please. I am a student adviser in large London Uni and vast majority of our housing casework is about deposits.
                    Many thanks.

                    tobylaura; can I have the link to your article/s please? and btw, it's dodgy....

                    Comment


                      #11
                      am sure the TDS schemes have anticipated this huge leap in workload!)
                      yeah, right

                      Comment


                        #12
                        Originally posted by Wickerman
                        The insurance backed schemes should not fundamentally alter how deposits are handled (with the exception of more accountability for agents/landlords) however the custodial scheme seems to put disputes and most other issues into the hands of the scheme operator. Basically once the landlord/agent has decided how the deposit should be dispersed it is up to the tenant to argue the case with the depositprotection.com people. If it cannot be resolved it would then go to arbitration, as with the other two services.
                        Could you explain what you mean- I was under the impression that all schemes were run in the same way apart from who got to keep the deposit.

                        In the case of the custodial scheme, the LL and T are supposed to come to an agreement if possible BEFORE requesting the deposit to be returned from the DPS.

                        Comment


                          #13
                          Originally posted by Wickerman
                          Where does it state that having poor admin will result in a fine?
                          Housing Act 2004, section 214(4).

                          Comment

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