Using a vehicle as a ‘deposit’?

Using a vehicle as a ‘deposit’?

16:32 PM, 23rd June 2015, About 6 years ago 29

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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. Using a vehicle as a deposit

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



Comments

by Luke P

21:59 PM, 23rd June 2015, About 6 years ago

I do keep meaning to send a donation...will get to it soon, between Court cases! 😛

by Mick Roberts

7:46 AM, 24th June 2015, About 6 years ago

Sounds just like my job. Except I don’t do the guarantor thing.

And most of my tenants wouldn't pass any checks.

by Luke P

8:02 AM, 24th June 2015, About 6 years ago

I've seen some of your videos, Mick -mine are often left in a similar state, have been ever since I started and it happens to all my other landlord friends in the area...it's not me, it's the standard of tenant on offer locally. Occasionally I consider cashing my 100-odd in for half a dozen detached/semi family houses in the Home Counties and rent to a better class of tenant...but then the returns aren't nearly as good...!

by Robert Mellors

14:54 PM, 24th June 2015, About 6 years ago

Hi Luke

I also let to the same type of tenants as you and Mick, and have similar problems, but I also do a lot of HMOs and these residents don't usually have cars or anything of resale value. If you are going to court and getting CCJs against the tenants, then presumably the bailiffs or HCEOs can seize their cars anyway?

There is a thing called a "Bill of Sale" which is basically like a mortgage on a person's chattels (possessions), i.e. a loan secured against the person's possessions. I looked into this a few years ago and it was all regulated by the Bills of Sale Act 1879? (year may be wrong). However, I know there has been a lot of changes in consumer credit legislation over the past few years so not sure if this area of law (i.e. Bills of Sale) has changed. If this has not changed then it could be a possibility for you, BUT I think it would probably put you into the realms of being a money lender (credit provider) and this may mean that you have to apply for a credit licence from the Office of Fair Trading or Financial Services Authority.

If you find a solution to this problem please post it on here as myself and other landlords that let to these types of tenants would really appreciate an effective enforcement method.

by Robert Mellors

15:01 PM, 24th June 2015, About 6 years ago

Reply to the comment left by "Robert Mellors" at "24/06/2015 - 14:54":

Bill of Sale Acts 1878 and 1882.

by Ian Ringrose

15:08 PM, 24th June 2015, About 6 years ago

In the very unclicky even that do not already do so, start using landlordreferencing.co.uk if you along with a few other landlords in your area use it, you will at least not be taking each others bad tenants.

by Mick Roberts

15:10 PM, 24th June 2015, About 6 years ago

Yes, it wears u down eventually doesn’t it.

I’ve bought a few better ones last few years (Mark’s ruddy fault showing me the easy life less time on work, on expensive houses), which have cost me double what I normally pay for same return. I think am I nuts? But then better class of tenant as I get older is something I need.

Ooh Rob & Luke if we all lived locally, we could alternate weeks, where we only work one week out 3 to manage each others, 'cause no one manages them like us when we go away, do they.

by Monty Bodkin

16:21 PM, 24th June 2015, About 6 years ago

As Romain says-

https://www.rla.org.uk/landlord/tenancy_deposits/tds-FAQ.shtml

Q.2b Can I take a deposit in some other form?
No - deposits can only be paid in the form of money. The legislation outlaws other transfers of moveable property attempted to give as security. Thus you could not take the tenant's Rolex watch off him to keep it during the tenancy as security!

What about taking just a small deposit, say £100, and a guarantor?

Or just put your rents up to cover the extra risk.

by Robert Mellors

16:29 PM, 24th June 2015, About 6 years ago

Reply to the comment left by "Monty Bodkin" at "24/06/2015 - 16:21":

Although you could not take a car (or Rolex watch etc) "as a deposit", taking it a security on a loan via a bill of sale which is then used as a deposit may perhaps be possible, but is fraught with possible complications and regulations. Perhaps the landlord could team up with a local "log book loan" company and see if they would set up some sort of arrangement that will pay out to you if the tenant defaults on their tenancy obligations?

by Luke P

16:31 PM, 24th June 2015, About 6 years ago

Reply to the comment left by "Monty Bodkin" at "24/06/2015 - 16:21":

Everyone pays an admin fee of £200 and all of my tenants have a guarantor. I can't put rents up too much or take a deposit because along with the first month's rent, it is too much for the local folk to raise.

I have a fantastic success rate in Court, but I handle all the cases myself and it is extremely time consuming dealing with idiotic defences by guarantors, (e.g. "I don't owe the rent because I'm a pensioner and my granddaughter decorated that property -it was nicer when she left than when she went in!")

At least 50% of my time is now taken up with dealing with ongoing cases.

Mick, maybe that's the trade-off...better properties with less return but equally less hassle.

Robert, I'll look into the Bill of Sales but feel you're right about credit and the licences/paperwork that may bring. I wish the Council would follow through with the threat of refusing to assist persons who have made themselves homeless, particularly through non-payment of rent. If they messed up and knew they had nowhere else to turn, they might think twice about causing havoc.


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