UK Landlord Forum / Life

Hi all,

I've finally bitten the bullet and have decided to manage the letting of my apartment myself (a saving of £720 pa) I have a large house which is currently HMO also but am going to test the waters with a smaller property first, smaller property = smaller mortgage = less loss if I ball's it up!

The agent that managed it before charged each prospective tenant a non refundable admin charge of £155.75 which included the legal costs for the preparation of the tenancy agreement.
Also £10 plus VAT for each reference letter taken up (one each for the bank and one for employers, which was also the security deposit to hold the property for them.

If references etc came back ok the tenant paid the standard deposit and first months rent the day they moved in. If there were any problerms and the tenant was found not suitable the fee was held by the agent to cover their costs. Either way they were £175.75 up really I suppose.

Now I'm not in the business or ripping people off but I'm looking at this from two angles - firstly I want a security deposit off the prospective tenant to hold the property, yes? Well should this come off their first months rent or will it form part of the main deposit to be held by the deposit scheme.
Secondly with credit checks, banks and employer references I will incur costs which if the tenent decided not to proceed (or if I find something unsavoury in their references and I decide not to proceed) I would wish to recoup.
So I guess my long convulted question is this, should I do as the letting agent does and charge a fee to cover costs (which would also effectively be the secuirty deposit, or should I not charge a fee, take a hit financially on the references and checks and just take a straightforward security deposit. How do you guys get around this please?

Oh and apologies for the spelling mistakes - I'm in my office so typing in a rush before my boss busts me!

Hey Kath,

Hmm....that all sounded rather confusing hah

I just take a security deposit, which is equal to one month's rent. I don't charge anything extra. I pay for the credit check myself- they don't cost much. If you start adding up too many initial costs, it might scare a lot of people away.

Sorry don't mean it to be confusing, it all makes sense in my head, god help me!! 

So you don't take a deposit to hold the property while your waiting for references to come back? You just take one month as deposit and one months rent in advance?

I spoke to my agent to get the low down and several others to get an idea but I guess I am over complicating things - something I'm prone to! 

Thanks for the advice, I'm working through my checklist of things to be doing so I'll no doubt have many more questions!

Just as an aside, my current agents just take up a bank, employers and independant reference but NOT a credit check, any thoughts on this bearing in mind you do a credit check?

Yeah, I usually do a credit check, check employers and references from previous Landlords (if available).

Nope, I've never held any additional deposit while waiting for references. But I start looking for tenants 2 months before my current tenants are due to move out. So i don't have any "down time", so to speak. Then if the tenant pulls the plug last min, I'll just keep the deposit (I make that clear, though, when they hand over the deposit).

Brill, cheers for that. I've got two months so I'll get cracking now.

I think the important thing also is, to show that the money isnt really a huge part of the deal, money scares alot of people, some people also use it as a tool of reconing, not a nice place to be.
Show more concern over the property and how much you loved staying there and point out some nice features.  This way the new tenant will think you are house proud and it should rub of on them.

Money can ruin a first impression of someone !

Hi there!

You could ask for a small non returnable deposit. If the full security deposit is say £450 - take a £100 deposit and make it clear it is non refundable to "cover costs". I always tend to make the security deposit more than the monthly rent as there can be no confusion at the end of the agreement that the deposit is a security deposit and can not be used as part of the final months rent etc. Not as critical now deposits held by 3rd party. If they do not take up the tenancy then they do not get the £100 back but after the tenancy ends i would be inclined to return the full £450 as a gesture of goodwill assuming all is well.

My agents charge £85 which I think is more reasonable than the rip off asked for by other agents.

Background checks are not that expensive £14 or so but I would always get the checks done and references from employers etc.

Best of luck and Happy Christmas to all!!

Jools