AST Clauses, Holding Deposits and Affordability Checks

AST Clauses, Holding Deposits and Affordability Checks

16:57 PM, 5th March 2014, About 10 years ago 61

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Hi All,

I’ve been getting the paperwork ready for a BTL property that I’m close to completing on. There’s three things that I’m not 100% sure about and was hoping for some advice on. They’re all unrelated, so apologies if I should be raising these under separate discussions…

(1) Adding clauses to an AST
I’m aware that you have to be VERY careful with ASTs. I’m using a NLA template but am wanting to add the following two items under the tenants obligations:

“Not to light any fires in the Property. Fireplaces in the Property have been retained as decorative features and are no longer suitable for open fires or fuel burning appliances.” AST Clauses Holding Deposits and Affordability Checks

and

“To have the use of all appliances in the property, as laid out in the Inventory save those which are noted as not working. However, should any items require repair, or be beyond repair, the Landlord does not undertake to pay for any costs to repair or to replace the appliance, except those which the Landlord is required by law to maintain.

Do these clauses sound reasonable? The first one is entirely my own concoction, so if anyone has any better ideas or thinks it is unnecessary, please tell me. I was just wanting to cover myself in case the tenant causes damage and claims never to have been aware that he couldn’t use the fireplaces. I was going to add something similar to the general notes in the inventory, and of course tell them in person.

The second one I wanted to add in case I end up with ‘heavy handed’ tenants. I’m happy to fix or replace one or two white goods a year, but don’t particularly want to be liable for replacing the entire lot!

(2) How much to charge for a holding deposit
I know there’s been some good discussion about holding deposits on this site already, but I don’t remember anyone saying how much they should be. I’ve read somewhere that ‘about a weeks rent’ should be asked for as a holding deposit, which seems reasonable. However, I’ve also read that up to ‘half a months rent’ can be asked for, which, although it would deter tenants pulling out at the last minute (which might end up costing the landlord several weeks rent), does seem rather steep. If asked for at all, what are other landlords asking for as a holding deposit?

(3) Affordability checks
Do people think that the standard referencing check of income being at least 2.5 x rent is enough? If the tenant is losing say 20% of their income to tax, that means half of their net income would go on rent. After council tax and utilities, not to mention any debts or other financial commitments they might have, many are going to be broke. It’s no wonder rent arrears are such a problem. Mortgage lenders require incomes to be 4 to 5 x mortgage, so a rental affordability check of 2.5 x rent seems rather low. Does anyone impose their own, more stringent criteria, such as 3 x rent? Or would this be too restrictive…?

Any advice or comments to any of these queries/topics would be most welcome and appreciated.

Simon


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Comments

Industry Observer

11:51 AM, 10th March 2014, About 10 years ago

Reply to the comment left by "Romain " at "10/03/2014 - 09:06":

Romain

I think it would match with Common Law and Equity, but not s11 I agree.

There would be an implied obligation as it has been provided by the Landlord as part of the demise. This brings me to point 8 in my little list earlier today and one I meant to include, and that is this:-

8. The rent as stated in the tenancy agreement will be for what the landlord is providing in terms of property description and then contents i.e. the inventory.

So unless in describing the rent and what it covers as per whether C Tax, water etc is inclusive or exclusive so unless the Landlord states the rent does not include the provision of the white goods (which they never do) then the implication is an elent of the rent is for those 'services' or facilities.

Soooooooooooooooo

As and when they conk out but are not repaired or replaced then the rent has to be adjusted as otherwise the tenant is paying for something he had but is no longer getting. You may as well be telling him he cannot use the garden, or the third befroom etc.

This is all so messy and potentially full of problems I'm amazed any Landlord ever goes down the excluded repairs etc route unless it is very much on a one off basis, and not standard practice.

Industry Observer

11:52 AM, 10th March 2014, About 10 years ago

Reply to the comment left by "Romain " at "10/03/2014 - 09:06":

Romain

I think it would match with Common Law and Equity, but not s11 I agree.

There would be an implied obligation as it has been provided by the Landlord as part of the demise. This brings me to point 8 in my little list earlier today and one I meant to include, and that is this:-

8. The rent as stated in the tenancy agreement will be for what the landlord is providing in terms of property description and then contents i.e. the inventory.

So unless in describing the rent and what it covers as per whether C Tax, water etc is inclusive or exclusive so unless the Landlord states the rent does not include the provision of the white goods (which they never do) then the implication is an elent of the rent is for those 'services' or facilities.

Soooooooooooooooo

As and when they conk out but are not repaired or replaced then the rent has to be adjusted as otherwise the tenant is paying for something he had but is no longer getting. You may as well be telling him he cannot use the garden, or the third befroom etc.

This is all so messy and potentially full of problems I'm amazed any Landlord ever goes down the excluded repairs etc route unless it is very much on a one off basis, and not standard practice.

Industry Observer

12:30 PM, 10th March 2014, About 10 years ago

Reply to the comment left by "Romain " at "10/03/2014 - 09:06":

Romain

I think it would match with Common Law and Equity, but not s11 I agree.

There would be an implied obligation as it has been provided by the Landlord as part of the demise. This brings me to point 8 in my little list earlier today and one I meant to include, and that is this:-

8. The rent as stated in the tenancy agreement will be for what the landlord is providing in terms of property description and then contents i.e. the inventory.

So unless in describing the rent and what it covers as per whether C Tax, water etc is inclusive or exclusive so unless the Landlord states the rent does not include the provision of the white goods (which they never do) then the implication is an elent of the rent is for those 'services' or facilities.

Soooooooooooooooo

As and when they conk out but are not repaired or replaced then the rent has to be adjusted as otherwise the tenant is paying for something he had but is no longer getting. You may as well be telling him he cannot use the garden, or the third befroom etc.

This is all so messy and potentially full of problems I'm amazed any Landlord ever goes down the excluded repairs etc route unless it is very much on a one off basis, and not standard practice.

Industry Observer

12:30 PM, 10th March 2014, About 10 years ago

Reply to the comment left by "Romain " at "10/03/2014 - 09:06":

Romain

I think it would match with Common Law and Equity, but not s11 I agree.

There would be an implied obligation as it has been provided by the Landlord as part of the demise. This brings me to point 8 in my little list earlier today and one I meant to include, and that is this:-

8. The rent as stated in the tenancy agreement will be for what the landlord is providing in terms of property description and then contents i.e. the inventory.

So unless in describing the rent and what it covers as per whether C Tax, water etc is inclusive or exclusive so unless the Landlord states the rent does not include the provision of the white goods (which they never do) then the implication is an elent of the rent is for those 'services' or facilities.

Soooooooooooooooo

As and when they conk out but are not repaired or replaced then the rent has to be adjusted as otherwise the tenant is paying for something he had but is no longer getting. You may as well be telling him he cannot use the garden, or the third befroom etc.

This is all so messy and potentially full of problems I'm amazed any Landlord ever goes down the excluded repairs etc route unless it is very much on a one off basis, and not standard practice.

Romain Garcin

12:40 PM, 10th March 2014, About 10 years ago

Reply to the comment left by "Industry Observer " at "10/03/2014 - 12:30":

"There would be an implied obligation as it has been provided by the Landlord as part of the demise."

My question is how would this obligation to repair arise?
Indeed, as said my understanding is that there is no such obligation at common law, and s.11 specifically exclude most white goods from repair obligations.
It does not make sense to me that there should be an 'implied obligation' when statute clearly states that there is not.

Now, regarding _replacement_ I can understand that if rent takes these appliances into account or if agreement creates an obligation to provide, then the tenant may have a valid claim.

Industry Observer

14:02 PM, 10th March 2014, About 10 years ago

Why is there no Comon Law implied obligation? Is it because of a lack of decisions from upper courts?

Simon Coppen

14:14 PM, 10th March 2014, About 10 years ago

Messy indeed...

If there's an implied obligation that everything provided by the landlord should be kept working, then should we not be changing batteries in smoke detectors, CO alarms and wall clocks too...? Not quite the same thing I know, and usually explained in the inventory/schedule!

In any case, I think we're all agreed that to be "good" landlords we should be repairing and replacing appliances and not adding any exclusion clauses to the AST. S11 is there if a landlord really is struggling with heavy handed tenants...

Mary Latham

17:59 PM, 10th March 2014, About 10 years ago

Thank you IO, I really do pride myself on being the best landlord that my tenants ever have and this has really paid off over the years. I have had many tenants who have returned to me or have sent relatives and friends to me - this is the best compliment a landlord can have.

Simon I do supply replacement batteries (back up batteries for smoke alarms because mine are all mains powered and interlinked) I also supply spare bulbs, plugs,vac bags and bin bags. I put toilet rolls, kitchen towels and hand wash in at the start of the tenancy and of course a bottle of wine and a welcome to you new home card. I leave details of the local restaurants, pubs, parks, supermarkets, rail timetables and any events in the area too. These things cost peanuts but say welcome and thank you for choosing my property to be your home.

I have been left chocolates, wine, flowers and thank you cards by outgoing tenants and this tells me that they have been happy in their home and means that I am doing my very important job properly.

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Romain Garcin

18:51 PM, 10th March 2014, About 10 years ago

Reply to the comment left by "Industry Observer " at "10/03/2014 - 14:02":

"Why is there no Comon Law implied obligation? Is it because of a lack of decisions from upper courts?"

Case law is that there is no implied obligation to repair in a lease, though I am not aware of specific case law regarding appliances.
I think that this is because of this lack of implied obligation that s.11 was drafted.

Simon Coppen

19:25 PM, 10th March 2014, About 10 years ago

Reply to the comment left by "Mary Latham" at "10/03/2014 - 17:59":

Mary, you certainly do sound like the perfect landlord and I'll be striving to match the example you set!

Thanks for sharing your approach.

ps. I don't know if you need to be careful about leaving spare plugs for your tenants, for electrical safety reasons (you may well mean fuses though...!)

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