Using a vehicle as a ‘deposit’?
I should perhaps start by saying that I operate in one of the poorest areas of the country and what goes on in the middle class rental market of the south of the country cannot be applied to how the market operates where I am.
I am renting to the bottom of the socio-economic scale and have been for near on 30 years now. I have well over 100 properties of my own and manage another 350+.
I do not take deposits and have not done so since 2007, although I am familiar with the rules surrounding monetary deposits. My security however is in the form of a homeowner guarantor. A good proportion of the tenants locally leave owing arrears and the properties in a mess. Almost everyone ends up paying (or rather the tenants’ guarantor does), with me winning 99% of cases. This is becoming a little tiresome though and more often the tenants are quite happy to stitch ‘granny’ up by leaving her to pick up the pieces (in the form of being sued).
What I have been pondering is the possibility of taking a vehicle as a form of deposit for a rental property -a bit like a ‘logbook loan’ is secured against a car. This is the sort of thing tenants would understand…it’s on their level as they are well used to borrowing money from these type of loan shops and an instant justice ‘hit’ in the form of me taking away their car (funny how they can barely dress their kids and don’t own a vacuum cleaner, yet have a car).
Could this be done? What should I consider when looking at this option? Would I need a credit licence etc?
After all, you can’t put a car into a deposit scheme and this would be in addition to a homeowner guarantor.
Perhaps I am barking up the wrong tree…
The reason for not taking monetary deposits are numerous, but mainly because the tenants here cannot raise the rent AND a deposit, as well as it being a complete faff to get the thing out of the scheme (and not nearly covering the arrears/damages caused).
Looking forward to reading your comments
Regards
Luke
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Member Since January 2011 - Comments: 12209 - Articles: 1408
4:34 PM, 23rd June 2015, About 11 years ago
Hi Luke
It’s certainly an interesting concept and you’re definitely thinking out side the box with this one.
I have no experience of log book loans so I have no idea how you would go about taking security. I too will be very interested to read others comments on this one.
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Member Since August 2013 - Comments: 883
5:47 PM, 23rd June 2015, About 11 years ago
If your idea is to seize your tenants’ cars when they own you for damages or arrears, I think (but am not sure) that you would still need to go through the courts first.
Also, the Housing Act 2004 states that a landlord may only require money as deposit for an AST.
Member Since March 2015 - Comments: 1969 - Articles: 1
8:05 PM, 23rd June 2015, About 11 years ago
What about a guarantors’ car?
Member Since March 2015 - Comments: 1969 - Articles: 1
8:07 PM, 23rd June 2015, About 11 years ago
What about a guarantors’ car? Or indeed any alternatives I could explore. RGI doesn’t work because none of my tenants would pass credit checks so I’d never rent anything.
Member Since January 2011 - Comments: 12209 - Articles: 1408
8:14 PM, 23rd June 2015, About 11 years ago
Reply to the comment left by “Luke P” at “23/06/2015 – 20:07“:
Hi Luke
Your existing strategy seems to be working from what you’ve said. Why would taking a guarantors car be any different to what you are already doing in terms of results, assuming you were being honest about your current 99% recovery rate?
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Member Since March 2015 - Comments: 1969 - Articles: 1
9:12 PM, 23rd June 2015, About 11 years ago
It’s long-winded and tiresome. It’s grinding me and my staff down -we’re more akin to a solicitors office these days. I would still take the guarantor to Court if necessary but I was looking for a more instant, ‘short, sharp, shock’ to ‘encourage’ those back on to the right track, so to speak…
Maybe forget the logbook idea, but is there anything that might work instead?
Member Since July 2013 - Comments: 1266 - Articles: 1
9:24 PM, 23rd June 2015, About 11 years ago
How will you know if it’s subject to finance?
Member Since January 2011 - Comments: 12209 - Articles: 1408
9:34 PM, 23rd June 2015, About 11 years ago
Reply to the comment left by “Luke P” at “23/06/2015 – 21:12“:
Possibly time to get out of the business when you feel like that Luke.
You wont though …. and you know it really 😀
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Member Since March 2015 - Comments: 1969 - Articles: 1
9:34 PM, 23rd June 2015, About 11 years ago
HPi check? There must be a way because it’s how many of the local loan shops operate and I can’t imagine they would be lending out the money secured against a vehicle if it wasn’t water-tight.
Perhaps I should cash in and retire…!
Member Since January 2011 - Comments: 12209 - Articles: 1408
9:37 PM, 23rd June 2015, About 11 years ago
Reply to the comment left by “Luke P” at “23/06/2015 – 21:34“:
Have a chat with the local loan shops then, tell them your dilemma and see if they can come up with a workable plan. If they do you will have a workable business model that could be replicated across the country for all landlords who provide LHA.
I might even be persuaded to help you to market it.
Need a plan to make billions?
There you have it!
Remember to make a big donation to support the running of this forum if it works out 😀
See >>> https://www.property118.com/donations/43590/
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