Can I ask Tenants to Register their own Deposits?

by Readers Question

14:00 PM, 11th February 2013
About 6 years ago

Can I ask Tenants to Register their own Deposits?

Make Text Bigger
Can I ask Tenants to Register their own Deposits?

Can I ask Tenants to Register their own DepositsI asked My|Deposits some time ago if my tenants deposit had to be re-protected if the AST rolled over to an SPT (Periodic Tenancy), when it was the same property, same terms, but increased rent, without taking an increased deposit.

Their reply was that it did not have to be re-protected as it had rolled over to a Periodic tenancy.

I recently had an email from My|Deposits about protecting deposits.  They probably sent the same mail to other landlords that use their service.  It says a tenant’s deposit does not have to be re-protected when the tenancy rolls over to a periodic but in their words it is now written:-

“A SPT is created when the end date of a fixed term AST has been reached and the existing tenants remains in the property on exactly the same terms as the original tenancy agreement (other than an agreement by the parties to increase the rent).”

This bit in brackets was not said in my original query so the deposit was not re-protected when going to a periodic tenancy, but the rent which was originally low was increased slightly.  The tenant was not offered a new AST as they could not find a Guarantor the second time around.

No wonder things have become confused.  This tenant has already been served a section 21 with the two months notice on the Periodic.  So although I checked things out with My|Deposits before hand I may now be in the wrong.

I have another tenant on a SPT who’s deposit was protected on the original AST. They  informed me the will have to move in April due to the LHA cuts. However, I have agreed to reduce their rent by £35pm.  They are happy to stay on with the reduction and I am also happy as finding a new tenant through an agent will cost me the £35pm. I am loosing on the rent but I keep the good tenants who have always paid the rent.

So NOW I am reducing the rent and the original terms have changed is re-protection needed again?

I would be happy to avoid all the confusion with large fines for getting it wrong by letting the tenant protect their own deposit.  They can send the deposit to scheme holders and get it registered. The landlord will not hold the deposit and the deposit cannot be released to the tenant without the landlord’s permission.  The tenant can be responsible for their own deposit and know if they pay the rent and do no damage it will be returned with the landlords approval.

Has anyone suggested this plan before?  I am not interested in holding the deposit, having it registered and sending reams of information to tenants, only to be penalised if I make an honest mistake.

If tenants are worried about their deposits, as are the government, and do-gooders,  why can’t we let them register it and send me the appropriate paperwork?

Maybe you can put this concept to the vote on your website?

I feel all honest landlords would be in favour as we can all do without the hassle, while still knowing the tenants deposit is being looked after in case we need to claim on it.  Someone in the government will probably have a good reason why tenants should not have the responsibility of registering their own deposit, but can handle the responsibility of looking after the LHA money!

If this is of interest you may use it in your articles.

Regards

Recardo



Comments

Recardo Knights

12:12 PM, 13th February 2013
About 6 years ago

Maybe I am not expressing my thoughts in a way that makes it clear for others to understand. The law says deposits must be protected, I Know. Good LL's do this through the various schemed, and try to jump through all the legal hoops that comes with confusion as no one wants to make things simple anymore. Tenants get protection and the required paper work, (Can you prove the paper work was sent at a later date.) nothing else required as long as NO new AST is issued and the tenant stays in the property. But that's to simple.

My suggestion is tenant want's the property, Thy send Their money to a solisitor, the Prime minister or a new government department call Safe Tenants Deposit, and pay their regestration fee. ( I don't need to see it or touch it. The tenant is now happy and can't complain about us nasty LL's nor be able claim 4 X deposit when I try to evict them for not paying rent, because of a silly mistake i made through confusion.

When they leave 5-10 years later they contact ''Safe Tenant's Deposit'' who in turn contacts the LL and askes us if the tenant can have their deposit back, or are we making a claim for damages etc.

So by law I have taken no deposit the tenant has given it to a third party to hold in case I wish to make a claim on it at a later date, Must admit this is to simples for penpushers in government trying to justify having a ''job''.

If I can get approval to set up ''Safe tenants Deposit'' and so release LL's from deposit confusion who would back me?
Do LL's out there just renew protection and ask the tenant to pay £50 for it, would the tenant be happy to pay?

Mark Alexander

12:22 PM, 13th February 2013
About 6 years ago

Hi Recardo

I don’t think people have misunderstood you or necessarily disagree with your suggestion. It may well be a viable alternative for some people if the law allowed for it. I think the point is that the law does not allow for your suggestion. Perhaps that will change one day, who knows?

Recardo Knights

13:38 PM, 13th February 2013
About 6 years ago

Thanks Mary I understand what my deposit are saying. I did not re-protect and that is OK according to them but still caused confusion and different points of view, as can be seen when reading through these posts.

All I am saying is save all the confusion and let the tenant place their deposit in any new government backed scheme (as below) so the LL is no longer responsible for their deposit as they never see it unless there is a dispute at the end of a tenancy. We will not be at risk of a large fine going to the tenant.

Just because the government drafted a housing act in 2004 does not mean it works well or is in favour of the honest landlord, but could be the exact opposite when coming across a wrongun tenant you want to evict. Tune it up and improve it in favour of the landlord, let the worried tenant have their own government backed scheme as in my post belowbelow. They do nothing wrong during the tenancy they get it all back without me ever seeing it.

I have been a landlord for 11 years and have always returned tenants deposit in full in a matter of days. I have a family moving at the end of the month who has been my tenants for 6 years. The property will require decorating and new carpets throughout, but there deposit will be refunded in full UNLESS there is evidence of criminal damage, broken toilet or bath, smashed kitchen units, cracked windows etc. Luckily I have not come across this in the past.

Mike

0:48 AM, 7th March 2013
About 6 years ago

I am wondering as a Landlord myself, weather it is worth taking a deposit from your tenants, that is only worth a months worth of rent when if you got things wrong could end up costing you more in breaking deposit protection law, for example, if you never took any deposit then there is no question of protecting it, and so if you were to issue section 21 notice, you could not possibly breach any deposit protection conditions, you simply allowed a tenant on a 1 months advance rent, or may be what if instead of taking a deposit, you could ask the tenant to pay 2 months rent upfront, I am not sure if this would be legal under the housing act.

If you took no deposit, then a worst case scenario would be that where a landlord lost say 3 months loss of rent, then without a deposit it would be 4 months loss, hardly going to break your back if you are a landlord!

Hence why bother with all this legal red tape!

Mark Alexander

7:39 AM, 7th March 2013
About 6 years ago

@Mike, if you take 2 months rent up front and then go on to charge monthly, one of those months worth of rent is a deposit by law, call it what you like, it still need to be protected.

Warraties could be the alternative but I've not been happy with the financial covenant of the companies offering them at the moment. That said, I think I may have found one which has strong backing so watch this space 🙂

Richard Kent

9:17 AM, 7th March 2013
About 6 years ago

@Recardo,
I have dealt with two periodic section 21 notices before.

If I was in your position and had intentions of evicting someone following a rent increase I would either not ask the tenant for the increase in the deposit or if I had taken it I would return that part of the deposit to them with a letter confirming it.

As far as I know, in law there is no requirement for you to keep a deposit of exactly 1 month rent.

My first periodic section 21 notice worked even though the rent was £550 and the deposit held was only £300

Whatever you do, when you take a deposit ask the tenant to sign a document clearly stating the amount you took as a deposit and ensure you give them a copy of the DPS information within the specified time (i think 14 days).

What do you or anyone else think about this?

Industry Observer

11:30 AM, 12th March 2013
About 6 years ago

Tenant can pay money in but someone needs to tell DPS where to place it i.e. in LL account with them (or agent).This is actually a very good way of avoiding any 30 day claim in respect of the money protection, as LL never touches it, but of course they still have to Issue PI and without money in hand and action 1 to be undertaken (protection) they may be more likely to overlook action 2 – issue PI within 30 days.But it can be done

1 2

Leave Comments

Please Log-In OR Become a member to reply to comments or subscribe to new comment notifications.

Forgotten your password?

OR

BECOME A MEMBER

Leasehold reform - HCLG committee favour commonhold

The Landlords Union

Become a Member, it's FREE

Our mission is to facilitate the sharing of best practice amongst UK landlords, tenants and letting agents

Learn More