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Property Hawk

Repaying the deposit

You might be aware that I’ve had a number of new tenants recently.

This has involved me having to conduct several tenant ‘check ins’ and ‘check outs’.

I’m relieved so far that the properties have all been handed over in ‘one piece’ and that more importantly; the new tenants seem legitimate members of the human race.  Having not met them before, any landlord is to a certain degree at the mercy of their letting agent not to deliver them a blood-sucking, psychopath!

I sometimes find that saying goodbye to a set of tenants is strangely a little ‘emotional’. (did I just write that? ) We have often gone through a lot together; blocked drains, a new carpet and even a complete boiler melt down.

In this respect we have bonded or at least 'shared experiences'. It’s the thought that your tenants who have been with you for several years will disappear off into the sunset never to be seen again.  One young lad who has had to move out of my 1 bed flat because of the impending birth of his first child was an exemplary tenant; so I was particularly galled to of lost him.

I know that the landlord press is full of stories of nightmare tenants; but I can confirm that contrary to this the majority of tenants are honest, decent human beings. (landlord wipes tear from corner of eye and exits stage left )

The deposit.

I generally, take just over a months rent as a deposit.  Ideally I’d like to take two but you have to balance this with the fact that many tenants, especially younger ones can’t raise that level of cash.  If I stuck rigidly to this ideal I suspect that my rental void periods would be much longer.

The ‘good old days’

In the ‘good old days’ before the advent of the Tenancy Deposit Scheme I would of simply handed the tenants a cheque for their deposit money, minus a deduction for any rent not paid and perhaps a bit off for a thorough clean of the oven.
 

I can’t think of an occasion when I had to withhold more than twenty or thirty quid.  At the end of the day my thoughts were that I had taken tens of thousands in rent from the tenant and if I had to shell out a couple of hundred on a new carpet which was ‘fair wear and tear’ then this was a price worth paying.  To my mind it’s part of the costs of running a letting business that you should factor in a certainlevel of refurbishment to your costs.  I know that some landlords take a much dimmer view. However, I’m afraid this laissez faire approach to deposits is no longer acceptable.


Tenancy Deposit Scheme

The new system of control ensures that a landlord needs to deposit their tenants’ money with either the custodial scheme or take insurance with one of the insurance backed tenancy deposit schemes

I’ve discussed in the past which one of the tenancy deposit schemes I think is best.
I’ve also covered the process of the repayment of the deposit from Deposit Protection Service (DPS).

My experience recently is having spoken to several tenants; they do not appear to remember or even be aware that they were sent details of their deposit by the DPS.  This is worrying.  Whilst it’s possible for a single party to make a claim on the deposit it’s inevitably going to be a more convoluted & time consuming process.

The repayment of the tenant’s deposit from the Deposit Protect Scheme involves a 6 stage process which goes as follows:

1. Landlord logs in to the deposit protection scheme website & selects the rental deposit to be repaid.

2. Then you as the landlord have to identify whether the lead tenant is present with their repayment ID to hand.


3. You as the landlord will then need to specify how much of the deposit is to be repaid.


4. Identify which bank account you wish to make the repayment from and whether you or the tenant should retain the surplus interest.


5. You will than be requested for a forwarding address for the tenant.

6. Finally, you will need your repayment ID.  This is NOT the deposit ID or agent/landlord ID but a separate ID that was sent to you by the Deposit Protection Service when you initially protected the deposit. The email has the title: DPS deposit protection confirmation



The DPS then responds by informing you that the repayment proposal has been successfully submitted and that they will seek agreement from the tenant to agree or disagree with it.  If they fail to agree the deposit becomes a disputed deposit.  If the tenant agrees they will make the repayment within 5 days of receiving the tenant’s response.


The Problem!

The problem is -  I really don’t have the time to sort it out!!!  A single cheque would have been so much simpler.

Have you got a view on the Deposit Protection Scheme or any other issue raised?

Please email them.

 


We have 50 plus small, bottom of the heap, flats in a single block, they were not that way in the first instance but a few tenants discouraged the good tenants by their bad behaviour. Many of the flats have excellent sea views across to France, perfect bachelor pads.   We have a large turnover of tenants often many per week and the deposit scheme was a step too far for us, far too much administration for NO reward.  So all the new tenants are the sort I would wish to avoid.  None have any money, not even the £20 for an electronic key.  So after many years of struggling to get deposits we finally decided, largely as a result of the deposit scheme, to abandon deposits altogether.  Instead we take a months rent in advance, which is never paid so the tenant is 1 month in arrears on day zero and two months in arrears on day one.

Overall not taking a deposit is not disadvantageous (oh all those lovely double negatives), the bad tenants trash the flats and the good ones keep them in good order.  We deal with the problem by giving a new tenant a flat on the ground floor.  If he proves to be good then he moves up eventually to the third floor where all our best and quietest tenants live segregated by an electronic security system.

We came to the conclusion that tenant deposits were totally unnecessary as good tenants always received their deposit at the end of the tenancy, bad tenants generally did not give a deposit in the first place.  If you take rent in advance rather than a deposit then it is important to say so clearly in the tenancy agreement or judges will accuse you of taking a deposit and refuse to evict because you have not protected the alleged deposit.

Of general interest is that two years ago 50% of our tenants paid their own rent now none do, they have all lost their jobs and Housing Benefit pay the lot.  It is little wonder that the government is concerned about the level of Housing Benefit.  We must not blame the individuals for many are prepared to work but there are few jobs of any kind around, although there is a hardcore who suffer from that well know medical condition of Bone Idleness. - David

 

PS Is their ANY legislation in favour of the Landlord?


Hi
Supposing your tenant disappears after owing you rent and leaving damage.
And you then fill in the DPS's claim form to claim the deposit that you sent them, without them being able to contact the tenant.
Before they will make the payment to you they will want proof of who you are.
You will need to get the claim form signed by a solicitor or another suitable official.
 
This happened to me, talk about giving me the run-around.
 
What do they think it is a game or something, and they have to throw as many obstacles in your path as they can?
The whole set-up is simply an exercise in extra work for nothing as far as I can see.
Even the tenants don’t like the hassle and delay involved in getting their money back.
Les. 

Discounted landlord insurance with Alan Boswell



Comments (1)

Deposits
I agree with you Les. I do not bother taking a deposit from my tenants either. I find the best way to let is to do it yourself, no letting agents involved. I always meet and vet my tenants personally.
#1 - lewis brand - 04/06/2012 - 17:57
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