9:00 AM, 17th October 2012, About 10 years ago 8
In this article I will explain how by using the “deed of assurance” legal document template, which is available to all members of The GOOD Landlords Campaign, you can achieve both.
This is a brand new strategy which can be used by landlords and letting agents.
There are three very good reasons why lots of letting agents and landlords choose to renew tenancy agreements. The first is to offer tenants extended security of tenure. The second is to test whether tenants have any intention of moving on. The third is to create an opportunity to charge extra fees. However, providing a new tenancy agreement certainly creates extra administration and can also result in increased cost if deposit protection is purchased as an alternative to utilising a custodial scheme. It is important to note that whenever a new tenancy is created (even for an existing tenant) that the deposit must be re-protected and a new deposit protection certificate must be issued. Failure to do this within 30 days of creating a new tenancy could result in a fine of up to 3 times the deposit and the inability to serve a section 21 notice. The alternative to creating a new tenancy is to provide a Deed of Assurance. A new tenancy is NOT protected, hence there is no need for the additional administration and cost associated with re-protecting the deposit. However, the Deed of Assurance can provide the tenant with peace of mind in respect of being able to remain in the property and a fee can be charged. Payment of that fee will also let the landlord know that the tenant has no intention of leaving.
Offering a tenant a Deed of Assurance provides an opportunity to charge a fee which tests the tenants commitment to remain in the property. There is no reason why such a fee can not be similar to a tenancy renewal fee, however, the administration is significantly less.
Like most landlords I have recognised that rental voids and tenant changeovers are one of my biggest expenses. This is because I have to re-decorate to bring my properties back to optimal letting condition. The associated voids and cost of re-letting can be substantial. Therefore, I work very hard to find tenants who will want to rent my properties long term. My lettings strategy is to advertise rents slightly below the market average in order to attract the maximum number of prospective tenants. I then choose the best ones and sometimes I ask them to bid against each other if I have several perfect candidates. Offering a Deed of Assurance in return for a premium rent or fee enables me to test a prospective tenants true desire to rent long term.
The Deed of Assurance is a concept I came up with personally. I’ve had a document template professional drafted and it’s simplicity has been commended by the, Chief Ombudsman Lewis Shand Smith and has even been referred to in a blog written by Robbie de Santos, Policy Officer at Shelter. I share this template with all members of The GOOD Landlords Campaign.