Simon Dewsberry Posted March 18, 2007 Report Share Posted March 18, 2007 Most councils operate the "Accredited Landlord scheme" which means their houses are in tip top condition and that they have fulfilled local council criteria to become an accredited Landlord. In the light of imminent legislation with respect to where a bond resides and, more importantly trying to make a successful claim against that bond some backdoor thinking is required!! This scheme is going to be pretty much unworkable and is chaos on a grand scale just waiting to happen. It will be fine with "good" tenants who generally don't present a problem any way as they will clean and own up to damages then agree a figure which can be sorted amically and quickly. But those tenants who refuse to pay the last months rent - to be covered by the bond (you know the one's who vanish and cannot be found) and usually leave some sort of damage or at best a cleaning bill - are going to present a huge problem : with the landlord missing a month's rent and a bond which is going to be very difficult to get your hands on. These sort of people will not participate in the "volantary" arbitration and this will end up in court proceedings, which can take around 6 months, then they dont show up and the case is adjurned then eventually you may get an order for the bond to be paid to you - alot of time and energy wasted. And in the mean time the Landlord must find funds to enable repairs in order to re let the property from his own pocket ! Fair - NOT! The reality of this is that the "Bond schemes" will be sat upon £millions waiting for court orders to decide who has it - This is based on the Australian model where it apparently works well ! It takes approx 6 days to get to court in Aust -not the 6 months as it is here in the UK wher courts are already stretched to the max. A lot of people have been upset by the fact that they will not have the cash flow at their disposal - the counter arguement being that it is not the Landlords money to play with. Wow this is earth shattering stuff - presumably on April 2 2007 all of the world's banks will stop overnight trading with customers money held on account!!! I work under simple rules - I hold a deposit which i do what the hell i like with - and when the time comes to pay it back I DO PAY IT BACK and if i dont i expect to be taken to court and made to pay it back. As i own £5million worth of property- is it unreasonable that i would like a token gesture of £500-£1000 per property as some form of security against damages ?? and as it is MY ASSET I clearly should have control of that deposit. When i next hire a car will my deposit be lodged in a secure bond deposit scheme ? the next time a put a deposit as security on anything other than a rented home will it be lodged in any kind of scheme? NOT THAT I AM AWARE OF ! In percentage terms deposit/asset we are talking miniscule figs approx 0.3% The Landlord is the one at risk here - not the tenant . It is time to get smart and turn the tables back to put the Landlord back in control With the above in mind it may be time to launch the "Acredited Tenant Scheme" (ATS) This will only really work for private Landlords rather than agencies. Due to the new legislation any "asset" taken as security must be lodged with the "bond scheme" inc fine art, motor cars etc so we need to move the bond money into a different format where it stays under the Landlord's control. So with the ATS there is no bond ! But what we introduce is the same as agencies have been doing for years - a "setup fee" This fee is equivalent to the bond figure plus reference fees (lets say £700+£50)( ie 6weeks rent -any one charging less than 6 weeks needs to re evaluate) This fee is not returnable and is not a bond! Now as we are running the ATS in order to become an "Acredited Tenant" the tenant must pay all rent on time and hand over the property in good order at the end and run the Tennacy properly ie no upseting neighbours, noise probems, police callouts etc. If they do this they will get an ATS certificate, a glowing reference and the icing on the cake A CASH GIFT FROM ME the Landlord of £700 ie their money back! but if they dont behave as they should you are in control of how much, if any you return to them. This is not a security against damage and does not need to be "lodged". This gives the Landlord control back - far more control than you were ever given before as they basically have lost the money and have to work hard (behave ) to get it back. This is probably exactly what the new legislation is design to get rid of- but for responsible Landlords like me this is the only option - i always play fair and never deduct more than a tenant actually costs me! But in the wrong hands could be seriosly abused. Am i a rogue Landlord - NO. Have we got a rogue Government ? This wont work on larger properties as tenants wont part with £2000 as a set up fee !! but you can split these into part bond / part agency fee and then lodge the bond portion in a "bond Scheme" Also if you are going to use the "custodian scheme" there are some very important chages you should consider making to your lease ! will post later when i have more time ! Have run this buy my legal team and at present we cant find any problems with it ! Would welcome any comments on the above! 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Matthew Posted March 19, 2007 Report Share Posted March 19, 2007 I like it. So what you are proposing is charging a setup fee, and then when the tenant leaves and all is in good order, the landlord gives the tenant a cash gift. It sounds like a way of getting around the rules, but how would you put that in a tenancy agreement and would the cash gift be taxable for the tenant and tax deductible for us landlords, bearing in mind the original setup fee would be included as taxable income? Link to comment Share on other sites More sharing options...
Simon Dewsberry Posted March 19, 2007 Author Report Share Posted March 19, 2007 i will treat it as a taxable income then a neccessary incentive deductable expense and argue withthe tax man if the time comes as it will form part of the AST program. I will basically treat it in the same way as the old "bond" unless anyone knows any different ! Have spoken to accountant who thinks the cash back may become a problem - my feeling is that any tax payable will be outweighed by the fact that i am back in control which is going to save me a lot of money in wasted time preparing court cases and court appearances etc This will need more research as to complicate matters i am a sole trader and Vat registered so i will also have some Vat implications on set up fee as a service provided. dont know how workable this will be but we need to do something ! charging two months up front is also a good idea on the premis that at least the money is in our possession ! also if you are going to use the custodial scheme and have a problem at the end of term dispute the whole bond and freeze it so tenant cant get any of it - if it is just a £50 cleaning bill they will probebly agree to pay in cash then you can inform bb that all is well and you are making no claim ! Another suggestion from my accountant was to sell the tenant the carpets at setup and buy back for same fig less damages ! i suspect as tenants get clued up on this we will all have no option but to use the government schemes though ! Commemts welcomed Link to comment Share on other sites More sharing options...
Matthew Posted March 19, 2007 Report Share Posted March 19, 2007 It does sound like an option and I don't think that it will pose as much a tax problem for landlords, but the tenant may have to pay tax on the "gift"? But then that is for them to declare. However, there are no tenancy agreement pre-written for this type of thing so you would be faced with having to pay a solicitor a lot of money to draft one up. What are you're thoughts on that, since I am very keen on the idea and will have about 11 new AST's to sort out i n the coming month. Regards, Mat. Link to comment Share on other sites More sharing options...
Simon Dewsberry Posted March 19, 2007 Author Report Share Posted March 19, 2007 Just had another conversation with my accountants - The above is maybe a little too "grey" and could potentially cause tax problems to eradicate this we have a new solution when the tenant moves in you sell a token article in the house for £700 a carpet or bed, robe, chest, desk, chair etc This is theirs now as they have bought it and they are welcome to take it when they leave. At the end of the agreement you commit to buy it back for what they paid for it - if at this time you find yourself in a position where they owe you anything -damage o/s rent etc clearly you would deduct this from any monies you may pay for the article when you buy it back It goes without saying that you must never sell them anything that is actually worth £700 or you will be missing that item and have damage to pay for with nothing to cover it ! WORK IN PROGRESS! Link to comment Share on other sites More sharing options...
Simon Dewsberry Posted March 19, 2007 Author Report Share Posted March 19, 2007 reference - new lease Personally i will write a few extra lines and put them on my lease after a swift call to my solicitor to verify that it is all above board! you will not need a complete lease re write but even if you do - you are only going to have to pay it once then do as i do and print them off on your pc ! I have a nasty(but fair) 8 page lease which is a concoction of aroud 20 leases with extras which just about covers every eventuallity I never paid a penny for it except 2 pints of cider for my solicitor to proof read it ! and yes it has got me out of a lot of sticky situations and dropped my tenants in some they couldn't get out of with all sorts of clauses which i have never invoked but they are there for when i need them ! Every time i hear about or have a new problem we add another line to make sure we dont get caught again ! Link to comment Share on other sites More sharing options...
Matthew Posted March 19, 2007 Report Share Posted March 19, 2007 I'm not sure the tenants would actually be happy with buying the carpet? I want to try and make things as simple as possible. Any chance of sending the lovely concoction of a lease accross? Link to comment Share on other sites More sharing options...
Simon Dewsberry Posted March 19, 2007 Author Report Share Posted March 19, 2007 Matthew sell them the fridge then !! It really doesn't matter what it is - a salt cellar if you want ! It is just the pprinciple which removes the "deposit " and makes it a sale and gets you out of having to lodge the bond ! It is the same thing people do when purchasing a house at more than the stamp duty thresholds -a house at £265,000 -buy the house house at 249,000 and the carpets and curtains for £16,000 just adjust the paper work to make it fit! as we have already said "work in progress " lets have some more ideas in the pot and hopefully between us all we can get something workable here ! Come on people let's have your twopenneth worth !! Simon Link to comment Share on other sites More sharing options...
Trenners Posted March 20, 2007 Report Share Posted March 20, 2007 I think you are all as "mad as hatters". A deposit is something, ANYTHING, that in the future can be used to recompense the landlord for damage caused to the property by the tenant. All of these hairbrained schemes are "Deposits in disguise" and you seriously risk being taken to court and fined THREE TIMES the Security Deposit as well as being forced to lodge the deposit with the custodial scheme. It is time we all accepted that this new legislation is going to be implemented and, like responsible business people, abide by the new laws. Mark Link to comment Share on other sites More sharing options...
Simon Dewsberry Posted March 20, 2007 Author Report Share Posted March 20, 2007 Hi Trenners You are, of course, absolutely right ! But if we can legally "disguise" the deposit as something else it is going to save us and the british court system one big pile of hassle. The above schemes are "mad" but legally effective - getting a tenant to agree to them is another matter of course ! But if we throw enough ideas in here maybe we can get something that does circumvent all the extra work and hassle then it has got to be worth a bit of banter at least !!??? The sale of goods cannot be in any way construed as a deposit nor can an agency fee -- Can it? My fears (outlined above ) are not with the vast majority of tenants but rather with the minority who take up all your time and cost you an absolute fortune! and the new rules put us in a very weak position involving potentially tons of extra admin work - do you not agree !? Simon Simon Link to comment Share on other sites More sharing options...
Simon Dewsberry Posted March 20, 2007 Author Report Share Posted March 20, 2007 Just had another thought ............... when some one is convicted of a sexual offence they are put on the national sex offenders register Now in this society there seem to be quite a few of them but once identified they are made to live under a tighter regime than the rest of the population who can go about their business until they transgress. Now we have a similar situation - with the vast majority of Landlords being good, reasonable and fair- now should they prove not to be then they should be held accountable and made to then lodge bonds . What ever happen to "innocent until proven guilty" in the UK eh ! We have all been "Tarred with the same brush" of a tiny minority of rogues ! November 07 onwards will be very interesting on here as Landlords go beserk with what is going to happen to them - Time will tell ! I wish i could say i am looking forward to it - I am not ! Both Landlords and Tenants will "lock" the bond for the opposite party out of pure spite ! It is also going to make life very difficult for some tenants who need the bond immediately for their next property because it wont be that accessable ! Knock on effect for the Landlord then with a tennant who cant move in due to lack of bond ! We provide a high risk invaluble service to the community and individuals and are being kicked squarely in the teeth right now. Simon Link to comment Share on other sites More sharing options...
Julierob Posted March 21, 2007 Report Share Posted March 21, 2007 Rodent I could not agree more with what you say. I only have two rented properties but it just galls me to think about handing over the bond to the government. As you say this is going to stack up a load of problems mostly in the landlords direction. For a very small percentage of "bad" landlords we are all being penalised. Afterall it is the landlord who is taking most of the risk in this arrangement, not the tenant. It is just another case of the "nanny state" - we are not able to do anything for ourselves. Try to provide for yourself in your old age and they try and block every move you make. It makes me sick and I think more people ought to get out of their lethargic state and start acting - like you are Mr Rodent. I just wish I was more intelligent and could suggest some useful ideas on this, but you seem to have thought through most things. Julie Link to comment Share on other sites More sharing options...
Simon Dewsberry Posted March 21, 2007 Author Report Share Posted March 21, 2007 Hi julie Nov Dec will be interesting as the tenants will start to do their thinking whilst we all try to dream up pre emptive movements - Tenants are very have very creative imaginations - or least mine do when they cant pay the rent - I've had everything from hijacked bank accounts to conspiring postmen stealing 3 cheques in row even rent money had to be sent to terminally ill parents to get life saving operation for one girl ! The countdown to chaos has begun !!! Simon Link to comment Share on other sites More sharing options...
gibson little Posted March 22, 2007 Report Share Posted March 22, 2007 Hi Rodent, At long last I feel I am talking to someone else in the same situation as myself. My husband and I rent rooms in HMOs and many of our tenants come through recommendation from other tenants so we must be doing something right! We whole heartedly endorse your comments and had begun to think of something along the same lines as you are proposing. Please keep us posted about any further developments Link to comment Share on other sites More sharing options...
Simon Dewsberry Posted March 23, 2007 Author Report Share Posted March 23, 2007 Hi Gibson Little What ideas have you got ? let's have them and bounce them around a little - you never know it could spark off the real solution - the more ridiculous the better ! My thoughts at the moment are to try as many different ones as i can to find out which ones the tenants will accept. Last year we trialled the ATS(Accredited Tenant Scheme) by accident ! This was done by an acquaintance of mine with a 6 mth ast on a 3 bed semi - he only has one BTL and misunderstood my explanation of the ATS as outlined above . He actually thought the new bond rules came in last year not this year and i was amazed to hear how he somehow he managed to end up with the Tenant paying both a Bond of £750 AND a set up fee of £750 with a view to giving it back (CASH GIFT) the tenant with cert etc. - The tenant was late paying his rent every month and was by no means a model tenant -at the end of his tenancy he also left a repair bill of £550. The Landlord refunded the Tenant £200 from the £750 Bond and didn't give a cash gift of any description or a certificate or a very good reference. (he kept his "set up fee" !!) I personally have a conscience and would have given a "cash gift" of some kind - but it does at least demonstrate that the scheme is workable ! Keep the ideas flowing Simon Link to comment Share on other sites More sharing options...
formerRenter Posted March 29, 2007 Report Share Posted March 29, 2007 As a former tenant (I have now bought) I think your hairbrained schemes are laughable. Once the TDS starts there is no way that I would accept a new tenancy without a protected deposit within the scheme. It would just mark the landlord out as someone who was trying to maintain control over the deposit, and possibly make the landlord look like the sort who would just rob you of your deposit. This might be unfair, but this is how it would look from a tenants point of view. I moved out of a rental recently, and the landlady inspected the flat and decided to try and take a deduction of £350 from our deposit. Unfortunately for her everything she had listed as reasons for deductions were all present on the check-in invetory... she was just trying her luck (we had left the place in better condition than when we moved in). Tenants do need protecting from landlords as much as landlords need protection from tenants. Of course not all landlords are like this. I've had some landlords that have been great, but quite a few who have been complete assh**es. I suspect landlords find the same with tenants that they rent to. The TDS won't give tenants undue rights, as any dispute will be solved via negotiation, then arbritration and then possibly court. When my landlady would not return my deposit in full the letting agents tried to get me to go to their independant arbitrators (as they are already running such a scheme) but I opted to threaten legal action instead. As a tenant I didn't trust the arbitrators to reach a fair decision. And I would also add that as a tenant I have been disgusted with the ridiculous fees that some agents and landlords try to charge (£50 for an AST - I think not). I've always voted with my feet, and if the agents/LLs don't waive all charges then I won't rent from them, and its always worked so far. Trying to add more fees at the start of the tenancy is unlikely to work, as many tenants already resent the high fees they are getting charged now. A local letting agent is now not charging any fees to the tenant, other than a £20 referencing fee. And it seems like they are getting busier and busier.... and guess who'll get all the best tenants? Thats my 2p worth. Link to comment Share on other sites More sharing options...
Simon Dewsberry Posted March 30, 2007 Author Report Share Posted March 30, 2007 Hi formerRenter Fair comment on your x landlady these are the very people the "TDS" is designed to stop in their tracks - and rightly so. I think your attitude is perfectly correct - and this is were the problem lies; as i as a landlord would not trust arbitration either ;so its off to court then ! no deposit/damages back for several months and work for both sides - You are clearly a sensible person, who, in this position, with a genuine greivace, would probably try to reason with the landlord to sort the matter which you did - the problem will lie with tenants unlike yourself who either dont respond at all; leaving court as the only option, or who dispute a genuine "bill" just to be awkward ! I stress once again that the vast majority of tenancies run their course problem free! but the problem cases are about to become bigproblem cases ! Link to comment Share on other sites More sharing options...
formerRenter Posted March 30, 2007 Report Share Posted March 30, 2007 Hi formerRenter Fair comment on your x landlady these are the very people the "TDS" is designed to stop in their tracks - and rightly so. I think your attitude is perfectly correct - and this is were the problem lies; as i as a landlord would not trust arbitration either ;so its off to court then ! no deposit/damages back for several months and work for both sides - You are clearly a sensible person, who, in this position, with a genuine greivace, would probably try to reason with the landlord to sort the matter which you did - the problem will lie with tenants unlike yourself who either dont respond at all; leaving court as the only option, or who dispute a genuine "bill" just to be awkward ! I stress once again that the vast majority of tenancies run their course problem free! but the problem cases are about to become bigproblem cases ! Thats about how I see it. Having rented quite a few places (probably about 7) over the last 9 years I would say that in 3 cases I have had landlords try to withold deposits that were unwarranted. And this is renting through supposedly reputable letting agents, and on higher end (more expensive) properties. I wonder which is more likely? A landlord trying to squeeze every deduction possible from a deposit even where unwarranted? or a tenant doing a runner/leaving damage etc? This will hold things up, but in reality I think its only fair that the money is protected as it is the tenants money held as a deposit, and the landlord isn't really the most sensible person to be making the final decision on whether it should be returned.... not very independant is it? I can't see what all the fuss is about over arrangement fees for the TDS, I think it will cost most landlords more in getting proper inventories etc done. All of the places I've rented over the last few years have had very poor inventories done (by supposedly professional letting agents) and rarely got them signed. The downside of this for the landlord (who was probably oblivious to the poor state fo the inventory/condition report) is that they wouldn't have a leg to stand on at arbitration or in court.... I think that is where most landlords will incur costs due to TDS... not in the actual cost of TDS arrangement fees etc. Link to comment Share on other sites More sharing options...
Simon Dewsberry Posted March 30, 2007 Author Report Share Posted March 30, 2007 From my experience the answer to the question is - a tenant leaving a us in situation which requires time /money to put right (usually cleaning especially windows cutains carpets skirting and ovens) usually this amounts to approx 4- 8 hours work - running a hoover round at 100 miles an hour is not acceptable !!is far more likely than a Landlord trying it on! This in itself is not a problem but the tenants reticence to agreeing to it is about to become a very big problem! As for independant decisions- as previously stated the court system is already in place for disputes over monies held/paid. I think if a landlord is found to be guilty of "milking" deposits then yes he should very definitely be made to lodge bond - until then - innocent until proven guilty. The fuss is over exactly the points you have raised preparing and recording far more accurate information which in 99% of case wont be required and the other 1% tons of time taken over what; a £50 cleaning bill !!!!!! Simon Link to comment Share on other sites More sharing options...
BTLWhizz Posted March 30, 2007 Report Share Posted March 30, 2007 From my experience the answer to the question is - a tenant leaving a us in situation which requires time /money to put right (usually cleaning especially windows cutains carpets skirting and ovens) usually this amounts to approx 4- 8 hours work - running a hoover round at 100 miles an hour is not acceptable !!is far more likely than a Landlord trying it on! This in itself is not a problem but the tenants reticence to agreeing to it is about to become a very big problem! As for independant decisions- as previously stated the court system is already in place for disputes over monies held/paid. I think if a landlord is found to be guilty of "milking" deposits then yes he should very definitely be made to lodge bond - until then - innocent until proven guilty. The fuss is over exactly the points you have raised preparing and recording far more accurate information which in 99% of case wont be required and the other 1% tons of time taken over what; a £50 cleaning bill !!!!!! Simon Surely a bit of cleaning after a tenant has left comes under the description of "fair wear and tear". We are renting properties to people, not porcelein dolls. I would expect to pay someone to clean a flat between tenants as while decent tenants will leave the property in a decent state on exit, you always want it to look spotless for the next tenants. Link to comment Share on other sites More sharing options...
Simon Dewsberry Posted March 30, 2007 Author Report Share Posted March 30, 2007 All we ask is that the property is returned in the same condition as it was handed to them "Fair wear and tear" absolutely no problem ! But with around 90 tenants at any given time thats 90 x £50 why should i pay £4500-£9000pa to clean other people's mess up ? when you have been thru a few more tenants and have a bigger portfolio to manage i'm sure you will see the point ! Your car analogy - hire car returned dirty -cleaning fee(fair wear and tear accepted) tool hire returned dirty -cleaning fee(fair wear and tear accepted) wedding suits etc returned dirty -cleaning fee(fair wear and tear accepted) fancy dress outfits returned dirty -cleaning fee(fair wear and tear accepted).......etc After you have cleaned out 100 ovens (because Tenant cant be bothered and you have shares in Mr Muscle)or paid some one to do it we'll have the conversation again ! (that is what i face approx every 12 months !) as i said b4 comes with ter ! Or scraped the body fat of around 100 people off the bathroom tiles along with the orange/black and green mould for the 100 th time I promise you will change your attitude. Most of my properties have Jacuzzi baths - yes we work at the higher end of the market and when this are often "black" because they havent been cleaned in 6 months - is this to be considered "fair wear and tear"? I don't feel that it is ! As before we are running businesses here not charities so if you wish to become a part time cleaner on no wages that is your perogative ! but that is not for me! This said- my portfolio are my assets which i look after so; if something needs doing it will get done and in quick time! Most problems will be attended to same day if not within 48 hours and have no problems with tenants over this. Simon Link to comment Share on other sites More sharing options...
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