Letting to pet owners in light of the tenant fees ban and new 5 week deposit protection rules

by Mark Alexander

10:03 AM, 3rd February 2019
About 7 months ago

Letting to pet owners in light of the tenant fees ban and new 5 week deposit protection rules

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Letting to pet owners in light of the tenant fees ban and new 5 week deposit protection rules

I have been reading several Facebook Group discussions about letting to pet owners in light of the tenants fees ban and new deposit protection rules capping the maximum amount of deposit to five weeks rents.

The general consensus is that landlords no longer wish to service this market, but to me, this = OPPORTUNITY.

When there are even less landlords than there are now who are willing to let to pet owners, then demand will intensify, so why would I ‘follow the herd’?

If I have properties which are appropriate to let to pet owners, then I will go the other way completely and actually advertise them as such. In my experience, pet owners tend to stay in a property for longer. Perhaps because it is difficult for them to find somewhere else to move to?

I appreciate that at face value it’s a bigger risk, but I also plan to advertise NO DEPOSIT REQUIRED.

That should get the phones ringing!

I might even go so far as to offer a five year Deed of Assurance.

At this point you might be thinking ‘this guy has lost the plot’, but I have given this opportunity a fair amount of thought.

Over the last few years I have been testing insurance based alternatives to taking deposits. My letting agents have sourced a policy which costs less than a few hundred pounds but provides significantly more protection than actually taking a deposit, thousands of £ more in fact. Very simply, my risk is mitigated by passing it on to the insurance company.

Naturally, the insurers will not want to take big risks either, so just like they do with Rent Guarantee and Legal Fees Protection Insurance (which I’m also a fan of at just £10 a month), the insurers tenant referencing is very robust. In short, if the insurers are happy to take on the risks then why wouldn’t I let them?

The advantage of thinking outside of the box, and servicing large chunks of the market which are avoided by other landlords, is that I can charge premium rents. Anything I can do to increase demand for my properties also increases the rent I can charge and the ability to be choosy about the people I decide to rent my properties to.

Best of all, I can still deal with all of this from one of the Southern most Countries in Europe (I reside in Malta). The reason is that I have such a good letting agent back in the UK. That agent is LettingSupermarket.com.

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Comments

Dylan Morris

10:19 AM, 7th February 2019
About 6 months ago

Reply to the comment left by JPB at 06/02/2019 - 10:06
Regarding your existing AST’s becoming void I suggest you speak to RLA and see what their opinion is. (I’m no legal expert but I would have thought they’ll be still valid as they’re signed prior to the new legislation, so long as you don’t charge any fees which post June are illegal).
I would have thought you can deduct monies from the security deposit for cleaning if the property has not been left in the condition it was when tenant first occupied. Same with damage that needs repairing, otherwise what’s the point of having a deposit ?

I’ve been thinking this morning about all the landlord changes we’ve received in the last few years and those in the pipeline. A list came into my mind:
1) Removal of mortgage interest as an expense.
2) Removal of wear and tear allowance for furnished properties.
3) Selective licencing fees
4) Extra 3% stamp duty
5) Removal of capital gains tax tapering relief.
6) Registration with ICO to comply with GDPR
7) How To Rent Guide
8) Banning of charging tenants any fees
9) Security deposit schemes mandatory
10) Security deposit restricted to 5 weeks max.
11) Right To Rent checks
12) Electrical checks every 5 years
13) EPC restriction below E rating
14) Three year tenancies
15) Removal of section 21 to seek possession
16) Gas certificate be served before tenancy commences or section 21 lost forever.
17) Proof of serving EPC, gas certificate and How To Rent guide to tenant prior to tenancy commencing otherwise section 21 lost.
18) Registration with Redress Scheme.

Michael Barnes

16:14 PM, 7th February 2019
About 6 months ago

Reply to the comment left by Dylan Morris at 07/02/2019 - 10:19
17) where is the proposal to invalidate S21 if EPC or R2R not served prior to tenancy?

SimonR

15:32 PM, 15th February 2019
About 6 months ago

The law is quite specific and you cannot insist someone uses a nil deposit scheme or insurance policy as they must have a choice as to how and what type of deposit to use. Here is a basic rundown to what is banned

Anything that the tenant (or someone acting on their behalf like a guarantor or parent) is required to pay as a condition of the 'grant, continuance, assignment, termination or renewal' of an assured shorthold tenancy or licence agreement.

This includes payments to third parties, either for services throughout the tenancy or for specific performance of a job and loans from third parties.

In short this means that pretty much any fee that is in the tenancy agreement will be void unless it is exempt.

Examples of banned fees then would be:
•Charging for a guarantor form
•Credit checks
•Inventories
•Cleaning services
•Referencing
•Professional cleaning
•Having the property de-flead as a condition of allowing pets in the property
•Admin charges
•Requirements to have specific insurance providers
•Gardening services

SimonR

15:37 PM, 15th February 2019
About 6 months ago

Reply to the comment left by Andy@Lettingsupermarket at 04/02/2019 - 11:07
Andy under the new legislation you will not be able to enforce the use of an insurance scheme or even make it a condition of the tenancy unless the landlord is going to cover the cost and even then that could be rocky ground. Surely you as a lettings provider know this don't you?

Also you cannot insist the tenant use a zero deposit scheme, they MUST be given the choice, 5 week cash deposit or zero deposit scheme. Again as a lettings provider you are aware of this aren't you??

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