Huge deposit - joint & several liablity

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    Huge deposit - joint & several liablity

    Hi there,

    I am trying to rent a room in a flat in Central London. Despite what seem like astronomical sums below, the room is actually incredibly good value in and of itself. The building is beautiful, has a garden, roof terrace, gym and pool, I'd have an en-suite and a large room, and the two current tenants seem lovely.


    The rental situation

    The property is let on an AST for the whole flat from 5 years ago - so a single tenancy, and anyone living there has joint and several liability.

    When someone moves in, they sign a swap agreement - I guess a kind of addendum to the original lease? - and pay the deposit directly to the outgoing tenant, so the money never leaves the letting agency account - as it's all technically one deposit, not three.

    The issue
    Because I am self-employed and have only been so for 9 months, the letting agents/landlord have asked for 6 weeks rent on top of the deposit payment to the outgoing tenant. I thought this was OK(ish) when I was assuming just my rent, but they want 6 weeks of the entire rent, as it's one tenancy and they cannot consider room rental prices.

    Some figures to give a clearer idea:

    - My share of the existing deposit is £770, an equal share of the total £2310 deposit.
    - The weekly rent is £550. So this would mean an additional deposit of £3300.
    - My liability of the total, new deposit = £4070, or roughly 80% of the whole thing

    The AST would be rewritten to make note of the larger deposit, and my larger share of it to be refunded if I were to move out. However, there would be no split of liability. It would still be joint and several.

    My question:

    The sum is very high. However, as far as I can see, there isn't a huge level of risk attached to it. My question is: is there something I am not seeing? A trick I'm missing? I've outlined my current thinking below, but would obviously appreciate any help here.

    The liability

    The deposit covers unpaid rent, damages, unpaid bills.

    Re rent: The person I am replacing is one of the original tenants (so leaving after five years). The other two tenants have been there for two and three years. They both have stable careers with solid, international companies. One is studying for CFA exams. They don't seem to be flighty people. The rent is also very low (for them) for this area so they would be crazy to mess up this tenancy unless something bizarre happened. Their portion of the deposit would cover a calendar month of their rent.

    Damages: From the evidence I have the likelihood of damages is low. The flat is kept very clean and they are really homely, calm people. As there is no sitting room they do not have more than one or two guests in the flat at any time - and pretty much in their rooms. If there are parties (rare), they are held in the garden/on the roof terrace. Short of someone knocking down a wall or smashing up the kitchen/bathroom, I can't see what would cause damages that could impinge on my deposit liability - beyond structural issues that would (I presume?) come under the landlord's buildings insurance.

    In terms of bills, at c.£200 per month for the entire flat, it would have to be a significant backlog to take up much of the deposit at all.

    In a normal, sane rental market I wouldn't normally consider this. But I've been flat-hunting for a long time. £990 a month seems a huge sum on the face of it, but I would say it's around £400 less than market value and definitely well within my budget. The London market is not pretty - I'm sure most on this forum have seen the box room studios and heard dodgy tales. The landlord here seems to be great - reasonable, solid and stable. The letting agents is a large, reputable one. This is a proper home, in a beautiful building in Central London and the only place I've seen in months of looking that not only met my expectations but exceeded them.

    But should I just be weighing up what level of risk I'm happy to accept, or is there something I'm missing?


    Okay, here's a situation. CFA housemate gets a secondment abroad within her solid international company - six months away and she starts soon, she's thrilled and busy so she doesn't have much time and picks as her replacement a pleasant random off Pleasant random is very nice for a while, then goes off the rails, doesn't pay rent for a couple of months. You and other nice housemate get P.R. out but in the fuss it takes you another month to replace P.R. L shrugs and offsets the giant joint deposit against the missed rent. P.R. has left no forwarding address for you to chase and their replacement only has to pay the normal level of deposit - not pay you back.

    Is that a possible scenario? I'm not actually sure, but that's the kind of thing I think you need to stress-test against. People move in and out of these arrangements constantly - the stable professional high-earners do a few years then buy. I really understand the terror that is the London rental market but I do think this is risky for you and would only go in having made peace with potentially losing the lot. Is there really no way the L or LA can ring-fence your additional deposit? Might they consider a guarantor instead?


      Joint tenancies are for people who know and trust each other, this doesn't apply in this situation and landlord/agent are simply botching things to save admin. No matter how good it is, I strongly suggest you don't get involved - if they will botch this because they are lazy - what else will they do a bodge job on?

      Just to comment on revelatia's 2nd paragraph, the ringfencing of a deposit may be technically possible (that doesn't mean the agent/landlord will be willing). I remember that Lawcruncher poster a guarantor document that ringfenced a guarantors liability to a specific students debts - I think similar wording would work here. If I can find it, I will post back here shortly


        Originally posted by Snorkerz View Post
        Lawcruncher poster a guarantor document that ringfenced a guarantors liability to a specific students debts - I think similar wording would work here. If I can find it, I will post back here shortly
        Yes I have that URL saved! It's here.

        The Residential Landlord's Association do a similar one, as well; but you have to be a member to access it: "The Limited Deed of Guarantee is to be used when the guarantor only wishes to guarantee a share of the cost (e.g. a parent guaranteeing their student child's share of the rent in a shared house) but with unlimited liability in respect of any other claims. The limited Guarantee limits the share of rent the Guarantor has to pay but the right to claim other losses (e.g. due to damage) is still unlimited because of the joint and several nature of the tenancy. Thus only the amount of rent payable is capped under the limited Guarantee".

        Sadly for the OP, I can't imagine for a moment that the agent will be willing to change their processes for him/her: if the OP doesn't go for it they will simply let it to the next applicant who comes along, who doesn't appreciate the significance of what they are signing up to.


          Originally posted by Ericthelobster View Post
          The limited Guarantee limits the share of rent the Guarantor has to pay but the right to claim other losses (e.g. due to damage) is still unlimited because of the joint and several nature of the tenancy. Thus only the amount of rent payable is capped under the limited Guarantee".
          Hmm, this does not make much sense.
          I think more accurate, and honest, to say that the landlord does not want to limit liability for damage because he does not want to get into arguments on who actually caused it.


            In an ideal world, the best thing to do would be not take the risk.
            The London rental market is not the ideal world and normal rules don't apply.

            The risks to the tenant:
            The tenants fall out / move out and rent is owed, and the deposit used to compensate - this is the worst case for the tenant as the agent has more of their money than the other tenants, so will suffer disproportionately.
            There is damage in the flat caused by a long gone tenant and the deposit used. This is both disproportionate for the tenant, and the risk to all tenants of this kind of arrangement.

            The mitigating factor:
            They will actually be receiving a deposit from each new tenant (and returning something to the departing tenant). They need to protect that new deposit (and issue PI etc) and I bet that they won't.
            They're fudging the admin to save work and it might come back to bite them if they don't take care.

            If the tenant leaving is the last original tenant, they should be careful they haven't lost sight of the lead tenant in the protection.
            Both of those are things to have as comfort factors to offset the risks.

            If I could afford it, personally, I'd do it - rental in London is insane; if you've found a decent place you can afford, bite their hand off.
            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).


              Thanks so much for the help everyone. I'm so sorry for the delay - I was preparing for and running (shuffling) the marathon this weekend and didn't realise notifications wouldn't come through to my email. Just checked in today to see all your helpful posts!

              I've requested that any future tenant swap will automatically trigger a review of my deposit amount. My circumstances will change in about two weeks to a permanent job and so I see no reason they shouldn't treat me like any other tenant with a permanent job at that point. Neither of the girls have plans to move, so my hope is that it will be at least six months before anything needs to be questioned at all, but in the event they do I should be able to retrieve a good portion of the extra deposit - probably all of it. It also means that if a completely unknown factor enters into the equation I have a choice again, rather than just accepting a different risk without any options.

              They won't ringfence at all. But, unless all three tenants move out at once, they also won't do an inspection of the flat. So unless there are catastrophic damages that require their immediate attention, anything like a broken floorboard, faulty oven ring, scuffed paintwork, etc is unlikely to be on my shoulders.

              I've been looking again today and this really is lower than market value for a wonderful flat and great quality of life. I think I'm happy with the risk. Thanks again all.


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                What I say is based on my own experience and research - Please don't take as gospel without first checking the gospel yourself.


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