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Selkirk

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I have a question and would appreciate your thoughts, thank you.

I recently bought a flat with a T in situ. It all went through no problem, his references came through great, he’s been in the flat for over 2 years and always paid on time, as it turns out he comes across as a genuine fellow so I feel lucky in that respect.

The new AST is in place with an agreed £25 pm increase in rent from £550 to £575.

The previous LL sent me a cheque for £550 which was the deposit he was holding along with another for pro rata rent. I decided to hold onto the deposit until the first rental payment hit my account.

I probably made an error here because the T said they’d change the details at the bank themselves for the next payment, well it didn’t come through, so I arranged to call round and we both went to his bank as he was panicking a bit, it turned out that the bank (and they admitted it) hadn’t acted on his request and had paid the previous LL £550 (which he sent on). We forgot to ask if £550 or £575 had gone from his account then walking back he wanted to know what to do about the £25 that could be outstanding so I said not to worry about it, if that was the case then have a beer on me.

This brings me to my question. The T is effectively £25 short on the deposit and is £25 short on the rent whenever he pays, is it possible then to keep hold of the deposit using this as the reason - I suppose I’m testing to see if it’s a loophole. I will admit to wanting to avoid paying this into a non interest paying or a chargeable scheme, but will do so once the next payment has hit my account - if I have to. Hopefully through reading the events I’ve displayed that I’m not trying to retain the money in order to be a future ‘rouge LL’ but just to retain control, earn some interest and keep the costs down for myself and the T. Just to clarify I’m not after this shortfall form the T.

Appreciate your thoughts.

Cheers

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Hi Selkirk

1. you should have protected deposit under TDS rules (within 14 days of receiving it ....)

2.If your ast mentions a deposit of £575(??) and you have acknowledged receipt of it then begs the Q ...where is it ..?

(as it is a dep you know where it SHOULD be!!!)

3.This particular money is "deposit" NOT rent and needs to be treated as such ...for your own protection 3x...etc)

4. you could take a payment upfront of 25pcm for 6 months as rent "upfront" but your admin needs to show clearly what is going on or you could get yourself into trouble....

I suppose you could argue that the Dep at this point has been depleted to the tune of £25 x2 and you are waiting for it to be topped up !?

But really dont see the point of putting yourself at risk for what amounts to pennies..........

Suggest you bill T for £25 bond top up (must say i always charge at least £100 over the rent fig as a bond though) and short rent -protect the dep immediately and get SO changed for next month then things can run smoothly !!!!!!!!!!!!

Simon

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Thanks Rodent

The SO is definately set up correctly the bank just hadn't done anything. I hear your point and will protect the deposit asap, it does say in the AST £550 deposit. As said i won't be chasing for the short rent or money on deposit, I obviously have proof that £550 was passed on for the deposit and that's what I'll protect. I just don't like the idea of losing control to a third party who will make millions out of this (all LL's not just me!) for doing sweet FA!

thanks again though

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I just don't like the idea of losing control to a third party who will make millions out of this (all LL's not just me!) for doing sweet FA!

You can regain an immense amount of "control" by using the insurance scheme ...okay costs a few quid (like £58 to join and £30 per dep) but you still have the cash in your control and i have already covered my costs ten times over, by having it in my control and not wasting valueable time and effort fighting to get it back ...it will be up to the tenant to fight for it instead of you.........!

but in my experience the ones who mess you about, are not the sort who want to leave a forwarding address any way

and just as an extra thought ....have "rediscovered" a line in my ast which i have never really used ...

" the deposit will not be returned until proof of final payment of utilities and council tax have been received ...." bearing in mind the sort of t that are going to cause "problems" with tds i think i might be insisting on this from now on which should help to balance the equation a litle .............

Mark ....Hooray, all good things come to those who wait hahahaLOll......!!!!!

next for the impossible: J4L to agree... Hahaha .........i must add that if T doesn't pay the extra £25 you know what i would do ..........LOL !!!!!!

Simon

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I can't imagine what everybody is worrying about with regard to the deposit amount (£550).

YOU decide on what deposit is taken, it's not set in stone. As long as it's deposited in the correct manner then it's not a problem. Regardless of what amount YOU take!

It is STILL a deposit and is STILL the amount you took. It is also STILL the Tenants, until you prove / argue otherwise!!

"This brings me to my question. The T is effectively £25 short on the deposit (I wouldn't worry about this, there is no law that states that you have to take 1 months rent in advance as a deposit which is what I feel you are insinuating)

"and is £25 short on the rent whenever he pays,"

( you're talking about the rent here, thus he is only in arrears for one month as you said "have a beer" for last months, explain the situation and get £25 cash from him. He seems like a nice guy and it doesn't sound like you'll get any problems.)

Get a new standing order set up for the £575/month and see what comes in. If the bank make another mistake and it's "light" then just tell him, and redo it for next month, take another cheque or cash for the difference.

" is it possible then to keep hold of the deposit using this as the reason"

No, a deposit is left for damage etc to the property (although rent arrears can be occasionally claimed against this) I can't see the reasoning or the point in doing this sorry, especially as a REASON!

"Hopefully through reading the events I've displayed that I'm not trying to retain the money in order to be a future rouge LL "

Ya think??????????? SEE BELOW . .. . . ..

"but just to retain control, earn some interest and keep the costs down for MYSELF and the T

Hello!!! How are you keepng costs down for the Tenant."

If ever a few sentences 'scream' of rogue Landlord, then this is it!!!!!!!!!!!

"next for the impossible: J4L to agree"

We can only wait, hope and see!! lol

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Well it's nice to see peace has broken out ... for now anyway!

cheers

UHH ....OOHHHHHHH ..

Spoke to soon ......

"If ever a few sentences 'scream' of rogue Landlord, then this is it!!!!!!!!!!!!!"

I think you is in big trouble , boy ...!!!

Wear you badge with pride !!!

"but just to retain control, earn some interest and keep the costs down for MYSELF and the T

Hello!!! How are you keepng costs down for the Tenant."

Hmm dont know about any one else but T will most definately be paying for the extra admin charges that i am suffering as a direct result of TDS etc ....but B4 any LA (you know who you are guys) start yapping about LL paying for the tds"service" just bear in mind that us LL's charge a considerably lower sum than you guys (G-U-Y-S that is how you spell parasite isn't it LOL haahah a ) Just kidding ...NOT...LOL

You may have to forgive this post as it is induced by moet!!

Simon

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haha. moet eh?

Funny cos my post was written under the influence of Black Label and I don't mean the champagne I mean CARLING! haha

On the subject of deposits why not install them in the DPS for free? You won't have to charge the Tenant for it then!

If you choose to 'keep the money in your back pocket' by using a paid scheme why should the T pay for the privilege?

unless of course you ask THEM where they would like it to be deposited? Do You?

. . . . . . nah didn't think so. . . . . . it's only their money!!!

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"do banks inform you of the whereabouts of cash on deposit"

No they don't, unless of course you were to ask them.

Frankly I'd trust a bank more than some Landlords any day, even Northern Rock!!!!!!!!!!

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Hi

Wow didn't think there could be so many answers.

J4L - I'd paid through the deposit to the DPS and posted that point some 6 hours before you posted, so I find it surprising you still took an aggressive approach to your reply. To clarify a few points, I wanted to 'retain control' in terms of have the deposit as a buffer in case the S/O didn't go through. I would prefer to earn the interest rather than the TDS - it's not their money either, they'll get to keep the ones that go wrong and no one wins. And yes I will pass on the full/part of the cost for any TDS or similar scheme that I have to pay for - Surely if it's explained correctly any T will be happy with the knowledge that their deposit money is safe, it's a feature and a benefit but it still creates a cost has to be paid for.

Lastly I was never after the £25 short rent. I said to the T if it is short have a beer on me and forget it.

Anyway appreciate the replies

cheers

oh one other thing, what the feck are you lot doing up at 3am :rolleyes:

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"so I find it surprising you still took an aggressive approach to your reply"

agressive?? was that because I highlighted some stuff in red? haha

I apologise, i'll use blue next time.

I do apologise for missing that post about you depositing the money, I had had a few beers by the time I posted.

My point about the TDS is if YOU choose to use an insurance scheme why should THE tenant pay for the privilege of you retaining the money and earning interest on it?

The free scheme supposedly pays interest to the parties that get the money returned to them anyway. Admittedly it's not at the same rate as you'd get outside of the scheme but at least it's something.

Your way means you earn MORE money off the tenants back. Don't you think tenants pay enough of your bills anyway?

Your property value is rising, your tenants are paying your mortgage, ain't that enough?

When will I meet a like minded LL who wants to be fair?

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My point about the TDS is if YOU choose to use an insurance scheme why should THE tenant pay for the privilege of you retaining the money and earning interest on it?

A T is going to have ingoing fees of some description, whether he lets direct with LL or thru LA (unless LL is a charity case!!!)

I charge an all inclusive ingoing fee of £75 to cover set up (inventory ast admin tds etc)as an agent for my own props ...

In my experience the only place a T is going to pay considerably more, is by letting thru a LA ...now why would anyone want to do that ....?

Not only that, but LA then sees fit to charge the LL as well (double bubble then)!!!!

Then after extracting all of this cash, thinks it is acceptable to refuse to cover tds costs and pass them to the LL.........

and then tries to lay a guilt trip to go with it (in the vast majority of cases)............haha good joke !!

The free scheme supposedly pays interest to the parties that get the money returned to them anyway. Admittedly it's not at the same rate as you'd get outside of the scheme but at least it's something.

Your way means you earn MORE money off the tenants back. Don't you think tenants pay enough of your bills anyway?

Which bills are they ?

the CT which is for them living at the prop ....

or did you mean the gas that the T burnt...

or maybe you meant the electricity they used ?

no, the water they drank and bathed in then .....?

the tv license for them to watch the tv..?

Telephone which they use...?

Broadband ....for their use ?

Just clarify which of my bills they are paying, and which of theirs I AM PAYING >>>!?

Your property value is rising,

At the moment yes ...now what will you be typing when they are going down?

Clearly prop is a long term investment and things need to be considered to take fluctuations into account ......

your tenants are paying your mortgage, ain't that enough?

No problem ..to avoid this perhaps i will consider free rent ..then i wont lie in bed feeling guilty ?

What are you on about Gareth? The T pays for a service , a service provided by LL at massive financial risk (relative to the tenants risk) LL get ripped off for thousands even tens of thousands every day by T's ...T's however have a total risk of approximately 1 months rent to loose !....which is now not at risk due to TDS..

And if i have no mortgage to pay and use all that lovely rent money to buy me a nice big harley then i wont feel at all guilty because there is no mortgage and no bills for them to pay ....so this is okay !

When will I meet a like minded LL who wants to be fair?

Fair ......T has choice of how to rent and the unfair LL (ingoing fees) are going to be much fairer to the T 's wallet on ingoing costs EVERY TIME !!

Cant say fairer then that can we ??

Sorry Selkirk, had to respond to that lot !!!

What do you reckon?

Simon

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Seems to me that some easily forget that letting out a property is a commercial venture, not a social service, which every tax payer contributes towards anyway. And that doesn't mean you're ripping off people because you want to maximize your returns. It's also a bit patronizing to assume that all tenants are hardship cases; they shop around as much as the next person and are no different from anyone else in society. Two tenant's in one of my properties earn over £100k between them so less of this "I'm fair, you're not" nonsense please.

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"Your way means you earn MORE money off the tenants back. Don't you think tenants pay enough of your bills anyway?

Your property value is rising, your tenants are paying your mortgage, ain't that enough?"

your having a laugh j4l, why do you think i am mortgaged to the hilt, my hair is falling out, my house is over run with paper work, etc..............

reason no 1. money.

reason no 2. erm cant think of any other.

resaon no 3. see above.

i am prepared to go into huge amounts of debt to fund properties on the hope that they will rise in the future and make money out of that, but on a month to month basis my "business" still has to make money, kids and dog still need fed like everyone elses.

if thats your opinion of LL's, who are your main customers you need to change jobs!

russ

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My view is that landlords percentages are tight, most get about a 6% return. Therefore any additional costs of TDS etc, that the landlord uses, will probably have to be passed on to the tenant to avoid the Landlord making a loss.

I think Simons point is very right, that there are so many benefits of having the money, thus making it worth the 30pounds needed to protect it....but at the tenants cost.

I think that if margins are tight, landlords should start charging setup fees, and if they go through letting agents then advise that 30 pounds or whatever it costs is added on to the setup fee to pay for the protection.

The problem LA's will have with this is that when they add it to their rediculously high admin fee they charge (which the Landlord doean't see), the tenants will not be happy to pay such an amount, and could result in the LA reducing their part of the admin fee by the 30 pounds, thus the LA in effect paying for the protection. So they probably wouldn't be happy about that :-(

I think we need to also realise that house prices could be quite stagnant for a long period. If prices are the same as they are now in 5 years (which I think they could well be), do you think Landlords would be happy to break even or make losses month by month on the rental yields, (potentially making 0 pounds in 5 years for lots of work) I think not. Result = Landlords will need higher yeilds if prospect of little capital growth = big increases in Rent to come.

Gone of the subject somewhat there, but I'm sure there was a link somewhere.

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I suspect that many LAs/LLs will absorb the cost of insurance based schemes and not pass it on to anyone unless there are arbitration costs under a claim. Like any business there are many things that influence the mix that contributes to prices. For example, many landlords are happy to accept free rent guarantee insurances offered to them. However, these aren't free and the cost is absorbed or made up somewhere else. So what I say, if you don't like the charges don't buy the service on offer but there's often more to it than meets the eye. Whatever portion of whatever cost ends up being passed to the tenant it is up to them to decide if it's acceptable to them and vote with their feet if not, so long as the souce of the cost is legitimate. Bottom line is make the property unaffordable because too much is heaped on the price then you have no tenants, so it all ultimately balances itself out anyway, without any high-brow opinion.

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I am going to respond to this when i feel a little bit soberer i think. . . . . . . . .

Some GOOD points , but I totally don't agree!!!

watch this space . . . . .

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So 4am and sober as a judge!! (where DID that saying come from exactly, most judges I know are half cut MOST of the time)

Now i've read all the posts I do agree that maybe I was a little hard on some of you Landlords but as an agent I have to say that day in day out I hear of Tenants that are being ridiculed by Landlords aswell as the Landlords stories of being ripped off by Tenants, and I try to be 'fair' to everyone. Yes I'm representing the Landlord but I personally won't assist in them taking the piss out of a human being. Unfortunately it's not in my nature, and that may cost me money but hey ho, so does poor customer service and some don't give two hoots about that in the running of their businesses. I know which side of the fence I'd rather be sitting in the long term.

Today I showed a really nice guy around a house who was so peed off with his Landlord that he's given notice without actually having somewhere to go.

His story? Well he's been with this same Landlord for 4 years, yup 4 years of paying this Landlords mortgage, 4 years ago when yields were higher I might add.

2 years ago the house developed a damp problem and for 6 months the Tenant waited for the Landlord to sort it but nothing. This exascerbated the guys asthma and he was hospitalised for a week and was really not very well.

Following the hospitalisation the Landlord agreed that this guy could move into one of his other houses which was in better condition. He has spent the last 18 months there and never once been late with rent payments, damaged anything in the properties, nor had any trouble with the Landlord or neighbours. The house they are in has 2 ensuite bedrooms and a bathroom, all 3 having shower cubicles/units. Last year one of the showers in the ensuite wouldn't work for some reason, he asked the LL if he could come and have a look. No response at ALL.

Well he's got 2 more I hear you say, ok, yes he has, and he thinks that also so he doesn't keep on to the LL.

Then a few months later a second shower breaks. Again no response from requests to fix that one. Now he still has a shower, but there are 2 of them living in this house who leave for work at the same time each day and this queueing for the shower thing causes so much hassle for them.

So I ask the good LL's out there, why hasn't the LL even responded to the faults here?

Why hasn't he been around or got someone to look at them?

Is he just a lazy LL or is it because he knows that if he DOES go around then he 'may' have to spend some of his money to fix the problems?

Where's the service there?

Why wouldn't you want to maintain your investment? Surely that's good business sense!

If he had a shop and the front looked dowdy would he paint it so it looked more welcoming, thus attracting more customers and increasing takings? Yeh probably!

But because Tenants are normally a single voice and 'not seen' they appear to have no say in the service they get. Who do they go to and say 'my shower's not working and he won't fix it?' There's nobody to go to, so many suffer in silence.

Now, he's losing a sound Tenant in my book, and his loss will be my gain hopefully.

Of course he could turn out to be the Tenant from hell but i'd deal with that when and if it is necessary but I surely won't stir this Tenant up and 'make' him into such.

Another story, 2 sisters, live in opposite flats, one has a child, and they have involved Environmental health because of the conditions that they live in. The Landlord has been given some time to do these works but hasn't done anything. Well when I say he hasn't done anything that's not totally true because what he HAS done is inform them that he's increasing the rent!!

haha. Wonder why?? I'm guessing that they don't want to pay an increase so they'll leave! So his job is done!

They'll go and another unsuspecting Tenant will move in and endure his squalid property until they've had enough . . . .

And the cycle continues. . . . . .

(to add here that the SAME LL called ME 2 weeks ago to appraise another of his properties. I walked in and then straight back out again. I wouldn't park my bike in there!)

How do these people excuse this behaviour??

Well it's a business and i'm in it to make money!!

Yes a lot of them do, but businesses rely on word of mouth, good service and good communication to be successful.

If Landlords are good i'll admit it, but if not i'm gonna slate them.

If I see something as unfair i'll say so, if people disagree then that's ok, it's just their opinions.

Matthew?

The problem LA's will have with this is that when they add it to their rediculously high admin fee they charge (which the Landlord doean't see),

I don't know about this! I think i'll refrain from answering . . .. .

To end I must agree that yes, it is a business and should be treated as such but good business is to buy right and make money properly, and giving customers a service that you profess to give, not pretend to just to get the T in and let them find out in 6 months time when their shower breaks and certainly not by bulking your 'extra' costs onto an unsuspecting Tenant, or not forking out when you need to to make 'your' house habitable.

If people think they fit into this category then fine, charge your Tenants the £30 to deposit their bonds, but please don't if you are one of these unscrupulous LL's who just take at every opportunity, and for any conceivable reason.

You occasionally have to put money INTO a business for it to be successful. . . ..

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The free scheme supposedly pays interest to the parties that get the money returned to them anyway. Admittedly it's not at the same rate as you'd get outside of the scheme but at least it's something.

Your way means you earn MORE money off the tenants back. Don't you think tenants pay enough of your bills anyway?

Which bills are they ?

the CT which is for them living at the prop ....

or did you mean the gas that the T burnt...

or maybe you meant the electricity they used ?

no, the water they drank and bathed in then .....?

the tv license for them to watch the tv..?

Telephone which they use...?

Broadband ....for their use ?

Just clarify which of my bills they are paying, and which of theirs I AM PAYING >>>!?

Your property value is rising,

At the moment yes ...now what will you be typing when they are going down?

Clearly prop is a long term investment and things need to be considered to take fluctuations into account ......

Yes a lot of them do, but businesses rely on word of mouth, good service and good communication to be successful.

How very, very true.....along with the opinions formed from the above ...which applies to every business.......

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when I said bills I meant mortgage.

I'm happy for my mortgage to be paid and make a few pounds from the rental income but i've already built in possible increases in interest rates so if they do continue to rise then the rent still covers it. If the rates go way beyond that then it's my poor planning that comes into question and i'd take that on the chin.

Hopefully my figures will work in my favour.

The 'extra' money gets put into a separate account and will be used if required for repairs/maintenance. If it doesn't get used I may spend some of it on a couple of bottles of wine at christmas and a christmas card for them.

THIS is my long term investment and I want to look after it and I can only do this by being smart in my decisions to keep my 'customers' happy.

. . . now what will you be typing when they are going down?

Oh this is a very interesting one actually. I'll be saying either

a) cut and run

:D hang on in there cos it can't get much worse

If house prices drop drastically and Landlords start falling into the negative equity bracket then that's a decision they'll have to make.

1st one to get the sharp end of the stick though will be the Tenant, with further rent increases and repair / maintenance works still not being carried out.

And yes, that makes good business sense to pass costs onto customers but at what cost?? Poor service?

Business is 2 way isn't it.

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