Higher Deposit Bond allowed?

by Readers Question

8:43 AM, 28th June 2019
About 2 years ago

Higher Deposit Bond allowed?

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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


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Comments

Mick Roberts

11:12 AM, 2nd July 2019
About 2 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.

Beaver

12:12 PM, 2nd July 2019
About 2 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.

Luke P

13:11 PM, 2nd July 2019
About 2 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.

Beaver

14:30 PM, 2nd July 2019
About 2 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.


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