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Deposits & contract timing

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Author Topic: Deposits & contract timing  (Read 64 times)
Newbie
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« on: July 27, 2020, 09:43:58 AM »

Hi all

Firstly thanks for a great website . I'm new to being a landlord so this has been a great source of pre-rental reading & prep!
So, Ive 'acquired' my first tenant through Open Rent. (OR)   She has paid a holding deposit, which I understand is one weeks rental income.
As I haven't gone through the 'Rent Now process on OR, I'll provide her with a email for the receipt, of which  my understanding is that the money paid has to be returned after 15 days .  I just need to clarify that a holding deposit doesn't have to be registered with a Deposit scheme?  Ive read the spec for Tenant Deposit Scheme and can't find anything about holding deposits so am presuming not?
Now am I right in thinking that the holding deposit, is to take the property off the market whilst the references are being run ( Ill start the process through Open Rent for those). Is it best to wait until the references are back before taking the property off ?  (Presuming OR or other rental platforms don't charge again if you've paid for 3 months advertising )

When the references are back presuming all okay, is it best to draw up the tenancy agreement on or before the return of the holding deposit, or can the holding deposit be use as part of the actual deposit if she forwards this on return of the references?  She is not moving in until end of September so just want clarification on whether it is the done thing to get the contract sorted ASAP ( ie as soon as the references return or can it wait until a few weeks prior to her moving in?   
I always thought that the deposit would paid together along with the first months rent  just prior to the tenancy beginning.  But is it best to get things wrapped up ASAP?

Guess I'm wary of leaving those few weeks between returning the holding deposit and her moving in with nothing in situ..
I'm presuming some tenants may not have the deposit until its returned from their previous tenants, so in those cases, one would have to wait, and then my next query is then , is it okay to get contracts drawn up without the transfer of the deposit? 

I hope my garbling makes sense!   I'll take any advice I can , and am looking forward to the trials and tribulations that landlord life may bring
Sr. Member
Posts: 376

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« Reply #1 on: July 27, 2020, 11:01:23 AM »

I just need to clarify that a holding deposit doesn't have to be registered with a Deposit scheme?

Correct.

Now am I right in thinking that the holding deposit, is to take the property off the market whilst the references are being run ( Ill start the process through Open Rent for those). Is it best to wait until the references are back before taking the property off ?  (Presuming OR or other rental platforms don't charge again if you've paid for 3 months advertising )

What did you agree the holding deposit is for?

In terms of the law, there's no legal requirement spelled out that you need to take to stop advertising etc. Having said that, there's very much the implication that the landlord does do that. The actual legal requirement is that you are not allowed to take more than one holding deposit at the same time.

or can the holding deposit be use as part of the actual deposit if she forwards this on return of the references?

Again, what did you agree the holding deposit is for?

It can goes towards the tenancy deposit or first payment of rent with consent of the tenant.

For the purposes of when the deposit have to be protected, "if all or part of the amount of the deposit is applied in accordance with paragraph 6(b), the amount applied is treated for the purposes of section 213 of the Housing Act 2004 (requirements in connection with deposits) as having been received by the landlord on the date of the tenancy agreement." So 30 days after the date of the tenancy agreement.
Newbie
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« Reply #2 on: July 28, 2020, 09:20:17 AM »

Hi KTC

Thanks for your replies. 
To clarify; it doesn't matter when the AST is draw up , but the deposit should be taken at the same time regardless of the length of time between
the date of agreement and move in date
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« Reply #3 on: July 29, 2020, 03:21:13 PM »

I always thought that the deposit would paid together along with the first months rent  just prior to the tenancy beginning.  But is it best to get things wrapped up ASAP?

I always ask for Deposit and first month of rent to be paid some time before the tenancy starts... well before Check-In, obviously. For me that means a week to 10 days, or thereabouts... I advise that this gives me time to protect the Deposit, get the Deposit ID and put it into the AST which I have already provided to them for review... then I get the admin. side pre-done. I have taken a Holding Deposit that I decided to keep separate from the other monies and also returned separately once I returned home after doing the Check-In.

I ensure the Tenants have at least a week to review the AST. I have a section near the beginning which details when they were given it for review, they can then take their time to ensure it has everything they want, and doesn't contain anything they'll not agree to.
Newbie
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« Reply #4 on: July 31, 2020, 04:04:38 PM »

Thanks for the advice .. Much appreciated
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