Ways round deposit scheme

[PTurner]

A landlord I spoke to gives a pro forma invoice for furniture and fixings then buys them back at the end if undamaged. Is it a way round taking a deposit

[Trenners]

Hi,

I am always amazed at the dodgy schemes that "Rigsbyeske" landlords come up with to try and avoid legislation that was implemented to regulate them !!

Buy-to-let is a business and landlords should abide by the law. It is the tenant's money that is going to be used to buy Rigsby's "firewood furniture" ........ in this latest hair-brained scheme .....

I really think all landlords should just abide by the new laws ..... they are fair and protect tenant's money ......

Any landlord that wants to run a dodgy business .... deserves the dodgy tenants that will trash their property !

In my opinion !

Mark

[Simon Dewsberry]

Hi All

I have to go with Mark on this one - we have explored all sorts of ways of avoiding the scheme(on here) but they are all not only futile but will only indicate to a tenant that you are not "cosher" or "professional" and they stand a much higher chance of being ripped off- not a brilliant position to be in when looking for good tenants!

Also doesn't give you a very firm foundation when trying to get rid of problem tenants when you are "potentially" outside of the law.

and leaves you wide open to a rather large penalty (3x Deposit) on balance - not a very clever way forward.

If you want to keep the deposit under your control- then use insurance scheme - pay the premium £35 ish and you are nearly back where you were b4 (but inside the law!) Personally i have included the cost if this along with ref fees as a set up fee - I now charge £100 +vat to an ingoing tenant - so no losses there.

I also now charge 2 months rent up front at the beginning of the tenancy (but i wont lose a tent over it and only charge 1 if i have to!)

Also have improved my inventory and made it alot more detailed with lines like

"the carpets and walls have no blemishes whatsover in this room" as a statement for each room

and at the end "other than the marks, blemishes or damage noted herein the property is deemed to be in A1 condition- if you feel we have missed any marks or blemishes etc please notify us before you sign this inventory as no damage will be accepted as present once we have received your signed inventory"

This shifts the onus completly onto the tenant to also do a proper inspection or not at their peril.

I am also doing a checkout sheet "save your bond" which outlines the problems and reasons why money is deducted from bonds - which are mainly cleaning issues and removal of rubbish - also explaing that we dont appreciate gobs of filler and dabs of the wrong colour paint on walls - the lease states "not to affix anything to walls or puncture fabric of walls" so no pics poster mirrors etc on walls ! If i borrowed your car and scratched or put a hole in the door or panel then you would expect a proper resprayed repair - guess what we feel the same same way about our walls - cost to fill and redecorate a room is approx £100 Please dont leave yourself liable to this cost !

I am still writing "save your bond " so work in progress!

At the end of the tenancy hopefully the documentation along with regular written reports on inspecections will negate any disagreements on retentions - time will tell !

We all have to accept and embrace the new legislation - but the wise ones will use it t there advantage ! The not so wise are going to get "tucked up " by wiser tenants!

Simon

[plym77]

Hi all

(I have already posted this elsewhere on the forum, however it applies to this post as well)

Whilst you will all be aware that I am a Chartered Tax Adviser, I should point out that legal issues are not my field, however, I have run the idea of 'refundable administration charges' and 'cash back schemes' past a couple of my contacts who are knowledgeable of the TDS (I should mention that they are not solicitors). Their opinions are as follows:

Cash Backs and Refundable Admin Charges on the termination of a lease are 'deemed deposits' and are therefore subject to the TDS scheme and therefore must be dealt with correctly through the TDS system, therefore they will not 'duck the system'.

Rent in Advance cannot legally be used to 'make good' a property, so therefore rent in advance in place of a deposit doesn't not benefit the landlord in this way. Whilst no deposit would mean no TDS, it would also mean no deposit = where is the incentive to return the property to its original state.

Incidentally, any admin charge taken at the beginning of a tenancy (so under the 'cash back' scheme) would be taxable on receipt, only getting relief again if the administration charge iis returned. Therefore whereas you once had a 'deposit' which was not taxed (unless part was kept to cover the expenses of making good a property), you would now have an administration charge - taxable in full. On a £500 administration charge, that could be as much as £200 in tax... so be very when considering a cash back scheme!

So the answer? I think it is 'comply' - particularly given the penalties in place for non-compliance.

I am surprised that so many Landlords wish to duck the system. I am a Landlord, but if I was a tenant I would not rent a property from a landlord who was trying to duck the system as I would see that as an intention not to return my deposit and any landlord wishing to bypass TDS is probably a bit of a Delboy!!

Regards

Sherena