Higher Deposit Bond allowed?
With the law changing to only allow 5 weeks rent equivalent for a deposit, can this be contested with Local Councils’s?
One Local Council (LC) I deal with has a Deposit Bond system whereby the deposit is essentially guaranteed by them from day 1 of the tenancy. The deposit is paid back to Council by the tenant by way of a two year payment system.
Experience to date is that such tenants to date that need the Bond then get into arrears/trash the property so the Deposit never fully covers the arrears/damage.
Can I therefore ask for more on the Deposit Bond at the start? I am assuming that the Council can’t charge any more to the tenant (over the 5 week deposit ruling), but it may focus their attention if they knowingly pass me a ‘difficult’ tenant but refuse to tell me that in the first place? Almost like a DHP in advance, but for once in favour of the LL. Clearly no financial loss to them at all if tenant proves a good one, but financial security to me if they aren’t.
Anyone had any experience of this? Anyone approached their LC Housing Dept?
WP
Comments
Have Your Say
Every day, landlords who want to influence policy and share real-world experience add their voice here. Your perspective helps keep the debate balanced.
Not a member yet? Join In Seconds
Login with
Previous Article
Government plans for 19 new garden communities
Member Since June 2013 - Comments: 3237 - Articles: 81
11:12 AM, 2nd July 2019, About 7 years ago
That’s my experience too:
Experience to date is that such tenants to date that need the Bond then get into arrears/trash the property so the Deposit never fully covers the arrears/damage.
Member Since May 2018 - Comments: 1999
12:12 PM, 2nd July 2019, About 7 years ago
Reply to the comment left by Mick Roberts at 02/07/2019 – 11:12You do have to wonder whether a tenant that cannot afford the deposit is a reasonable credit risk.
In terms of how the law has recently been changed, if you are only permitted to take the equivalent of 5 weeks rent as a deposit, if you have reasonable concerns about the risk of a valuable property in good condition being trashed then your only legitimate option is to raise the rent.
It might have been a fairer system and better for the tenant if you had been able to hold the rent down to encourage long-term lets, take two months deposit but return the deposit to them at the end of the tenancy at say bank rate plus a rate that was regulated to avoid usury e.g. central bank rate plus a % specified within a given range. That would have provided choice for tenants and security for landlords.
As it is, the only option that a landlord who maintains his or her property in good condition for the benefit of both landlord and tenant has is to raise rents.
Member Since March 2015 - Comments: 1969 - Articles: 1
1:11 PM, 2nd July 2019, About 7 years ago
Just get them (the LC) to be guarantors rather than offering a bond. If they won’t, then they don’t get the property.
Member Since May 2018 - Comments: 1999
2:30 PM, 2nd July 2019, About 7 years ago
Reply to the comment left by Luke P at 02/07/2019 – 13:11
Seems to me that being guarantors would be a good role for Shelter. 😉
At the moment the only options you have to reduce your risk when tenants trash the property, don’t clean it, heat it etc. are:
(a) Spend more on insurance (and pass on the cost in increased rent), and/or
(b) Raise the rent to get a higher deposit.