UK Landlord Forum / Life

I'm late - by two weeks registering a tenant's deposit, quite remiss of me. I was abroad for a month, literally signed agreement, recv'd funds, then hopped on a flight. Family members thankfully prepped the house for the handover.

Question is, I have this money and, looking at the situation, feel I should just hand it back to the tenant out of goodwill for my mistake. I don't mind forfeiting the right for redress re deductions and breakages. Tenant so far seems a good one, very house proud and on time with second rent payment.

But I'm looking ahead, couple of years down the line and am now aware I've little right to serve a Section 21 should the need arise and also liable to be sued for three times the deposit if the tenant so desires.

By handing the deposit back will I mitigate any potential further losses?
or if I hold my hands up, register the deposit late, will I be fined a hefty amount?

Hand the deposit back, it's your best play.

Holding your hands up and registering the deposit late won't do you any real favours, because the S21 will still be invalid if you serve it in the future, and you'll still be prone to be prosecuted for x 3.

So, am I correct in thinking by them signing for the return of the deposit I regain the right to serve a Section 21? Notwithstanding the usual time stipulations.

This despotic, sorry deposit protection scheme has me wondering whether they're worth it at all. Especially in my own circumstances, I most often let unfurnished properties – long term if I'm lucky. I fully expect at the end of each lease to go in; clean, update, re-carpet, and magnoliarise the place. A deposit being kept back barely dents this budget...and the wrangling with the tenant over it... well you can't put a price on stress.

Seriously considering having the next let offered with no deposit but with the rent set at a slightly higher level. < Essentially the deposit divided up by 12 and this added monthly to two six month ASTs. Then at the end of the twelve months and two property inspections later... if all's well and good offer the tenancy back at a reduced rate.

Any flaws in this thinking?

A deposit is not mandatory, but protecting any taken deposit is.

So, if you can let your properties at a higher rental amount you can go for that.

It doesn't help you with your current predicament, though.

At the moment, you have a good Tenant... but as you didn't protect the deposit correctly you cannot serve a Section 21. To do that you would have to return the deposit. Then you could serve a Section 21. You could return the deposit right now... your good Tenant might be scratching their head, wondering why. You could return the deposit just before you want to serve a Section 21.

Neither path removes your potential liability for being sued for 1x to 3x the deposit... that remains a risk, and will be for years to come.

Facts... it's not 3x the deposit - it's 1x to 3x - so up to 3x. You don't have little right to serve a Section 21, you can serve them all you want, but your Section 21 won't be valid until the deposit issue is resolved.

What I worry about in these situations is that the Tenant is lovely now... but if the tenancy is terminated at some future point and there is any bad feeling at all, you are somewhat over a barrel. If the Tenant leaves of their own accord, happily, and is (and remains) ignorant of this legislation then you might not have any impact at all.

Quote from: Lethis on October 21, 2014, 09:49:15 AM

Seriously considering having the next let offered with no deposit but with the rent set at a slightly higher level. < Essentially the deposit divided up by 12 and this added monthly to two six month ASTs. Then at the end of the twelve months and two property inspections later... if all's well and good offer the tenancy back at a reduced rate.

Any flaws in this thinking?

Good idea, just don't mention that the rent is higher in lieu of a deposit because some smartarse legal person will argue it is a deposit, so no incentivisation! As for reducing the rent after a year, you'd probably want to be putting it up!

Quote from: Riptide on October 21, 2014, 11:56:33 AM
Good idea, just don't mention that the rent is higher in lieu of a deposit because some smartarse legal person will argue it is a deposit, so no incentivisation! As for reducing the rent after a year, you'd probably want to be putting it up!

Aye, ideal worlds (for Landlords) and all that. You're right though best not to admit to any agenda - even if it's pretty transparent. The biggest gripe I've noticed when taking on a tenant, from their prospective, has been their worry about the deposit. The houses I have appeal to low to middle earners and I think this scheme may prove more attractive. I'm going to give this a go on my next venture; will still likely nudge the rent down after one year, but make it out of the blue and even then discretionary. Conscientious capitalist here and any ostensible goodwill I'm hoping may serve to lock in a good tenant.

No increase would likely be just as welcome. Especially if accompanied by a letter or email saying something like "Although inflation during the last year would normally mean that I would raise the rent by £X per calendar month, I am willing to forego this increase if / as..."

Challenge is obviously getting them through the door in the first place if the higher price you will charge is that obvious.

Agreed, it's a shade over 8% more than the average I'd ordinarily want, counting on the 'No Deposit' required being the lure. Let's see how I go.

Quote from: Lethis on October 21, 2014, 01:57:31 PM
Agreed, it's a shade over 8% more than the average I'd ordinarily want, counting on the 'No Deposit' required being the lure. Let's see how I go.

It would certainly be a lure, I just don't know what you'd catch.  Seems similar to putting dog poo on the end of a fishing line and hook to see what you catch.  Probably wouldn't want to eat it.

A place offered with no deposit would make those unable to manage there finances keen to get your place as it may well be the only place they can afford.

This is not the sort of tenant that normally works out.

I agree with you 100% that really the deposit should rarely be needed, in 20 years I have never had to deduct ( the only time I would have, they didn't pay the last months rent)


Also this DPS thing is a crock of shit.

IMHO the sort of tenant who cannot raise a deposit is the sort of tenant who might not be able to sustain their monthly payments.

I see getting a deposit as part of the tenant vetting procedure.  It is not foolproof test, but it can sort the wheat from the chaff.

Quote from: boboff on October 22, 2014, 06:38:25 AMAlso this DPS thing is a crock of shit.

Do you mean the DPS specifically, or all deposit protection schemes?

I quite like the DPS. Their email answerers can't get off the fence to save their life, so don't ever raise an interesting question with them, but the website is nice and simple and things do seem to work quite well.

I meant the whole thing. Not them as an organisation.

Not the principal of the thing, crock landlords not repaying deposits unfairly is a crock of shit too, but this system of getting terms signed in 30 days, when they actually text the tenant the same day and say the deposit has been protected, is ridiculous....

Yes, I know what you mean... although I stand by the fact that serving the Prescribed Information and Terms and Conditions is not hard, it feels like a trap. The DPS (as an example) could quite easily forward both items to the email address provided by the Tenants for the Tenants and it would always be 100% correct and be done in time, as it is simply a form filled-in with the information that has been provided to them... the DPS would then retain a record saying "PI and Ts&Cs sent to Tenants on XX XXX XXXX" - even simpler. The legislation could then focus on the Landlords who are not protecting the deposits at all, which is surely the more important focus area.

Quote from: Hippogriff on October 22, 2014, 10:07:19 AM
The DPS (as an example) could quite easily forward both items to the email address provided by the Tenants for the Tenants and it would always be 100% correct and be done in time,

Nice idea but would only work if receipt could be proven, and this is not possible with email, and questionable without adding significant expense with postal mail.

No, the point is missed... the process would be changed so that becomes the acceptable process. The Tenant provides an email address and the deposit protection scheme sending the email to that address is sufficient. As the Tenant provided the email address to use only a few days (or hours) before, there can be no excuse that the email address was changed or removed from service. That being the process, there is no need for proof of receipt. No need for physical documents, certainly no need for signatures - when are we, in the 90s?

Quote from: Hippogriff on October 22, 2014, 10:41:34 AM
No, the point is missed... the process would be changed so that becomes the acceptable process. The Tenant provides an email address and the deposit protection scheme sending the email to that address is sufficient. As the Tenant provided the email address to use only a few days (or hours) before, there can be no excuse that the email address was changed or removed from service. That being the process, there is no need for proof of receipt. No need for physical documents, certainly no need for signatures - when are we, in the 90s?

If you dont provide an some verification of the channel, then you might as well just SMS to the mobile. 

SMS seems okay to me as well!

Protect the deposit- Yes.
Arbitrate problems - Yes

Threaten landlords with a fine of at least once times the deposit for not get some forms signed on the right day, a load of shit.

I am sorry, but I think this is fundamentally wrong, I am going to write to my Mum,

I agree with you in regards to DPS's procedures.
So many landlords who submitted a deposit in the first place but forgot about PI or resubmitting after signing new contract.

Maybe as landlords we should start some kind of lobbing group to change/simplified the law in this respect?

Quote from: Annabel on February 16, 2015, 03:36:41 PM
I agree with you in regards to DPS's procedures.
So many landlords who submitted a deposit in the first place but forgot about PI or resubmitting after signing new contract.

Maybe as landlords we should start some kind of lobbing group to change/simplified the law in this respect?

Already happening!  But having said that, it's not hard to follow with the tinyest bit of research.