mad_maz Posted October 24, 2007 Report Share Posted October 24, 2007 Hi I am currently advertising a property for rent, and have had enquiries from prospective tenants. One of the applicants has advised that her husband is employed and she looks after their 18 month old child. She also advised that people looking for their first home, can now get assistance from their LA with a 'bond scheme' whereby the LA pay the deposit and sometimes the first months rent. I am reluctant to put HB T's into this particular property and wondered if anyone else has encountered this scheme? She has also suggested that I sign a 'preliminary tenancy agreement' for her to return to the LA whereby they assess the property and rent to see if they will agree to the bond scheme. I have no intention of signing anything, at least until I fully understand what it entails, and not having yet met this person I do not have any intention of offering her the tenancy at this stage. If any one can enlighten me of the pro's and con's I would appreciate it - if I don't need to utilise the bond scheme this time, I may encounter it again going forward. Thanks Maz Link to comment Share on other sites More sharing options...
Simon Dewsberry Posted October 24, 2007 Report Share Posted October 24, 2007 hi maz It sounds like a "pre tennacy determination" which basically is a request for HB to put forward the rent(HB) fig they are prepared to give to a particular T in a (in this case ..your)property.. The "LA bond scheme" can work in different ways 1 it may pay first month rent and bond as a grant 2 or as a loan to T 3 or it may give you an "bond certificate" which means you dont actually get the cash but a written Guarantee that they will cover the cost upto £xx if called upon to do so ... Clearly it is not prudent to sign an ast until prospective T has been fully referenced and approved by either you or LAgent on your behalf !!! Simon Link to comment Share on other sites More sharing options...
Trenners Posted October 25, 2007 Report Share Posted October 25, 2007 Hi All, Don't confuse a PTD (pre-tenancy determination) with an AST (assured shorthold tenancy). A PTD is almost a MANDATORY requirement prior to deciding whether to accept a HB tenant or not as it confirms the MAXIMUM amount of rent that the Council will pay for your property. The Landlord MUST sign this PTD document to be valid. This, by the sound of it, is what you tenant is asking you to do. The signature confirms that your THINKING about renting the property to the tenant but until you know how much rent the Council MIGHT pay - you cannot proceed with your decision., Remember, HB is a means tested benefit. Even though a PTD might come back and say that the Council will pay (for example) £600 per month rent for your property - if the tenant has savings, earns money etc etc then they may be ENTITLED to nothing .... meaning that the tenant will need to pay all of the rent from their own money. An AST is a tenancy agreement - totally different to a PTD - never sign an AST until you are very sure. Good luck, Mark Link to comment Share on other sites More sharing options...
J4L Posted October 25, 2007 Report Share Posted October 25, 2007 Hi, All answers above are correct but could I add one thing to this Many Local authorities run such schemes and sometimes the 'bond scheme' is referred to as a 'paper bond' it does exactly as Simon states but please speak to the dept or scheme coordinator before actually agreeing to it because you may find that the amount they 'guarantee' is much less than say your normal required 'months equivalent' deposit and may not cover everything you want it to. One such scheme, local to us, guarantees the whole amount but asks that the Tenant pays them half of it which they hold onto. This aims to give the T some independance and is quite good apart from the fact that it doesn't cover cleaning which you may or may not want it to. Read the small print before agreeing to any such scheme. One thing to add to Mark's post aswell is that the PTD )done by the Rent assessment people) never ever agrees with what you are setting the rent at. Unless yours is massively undervalued that is, so remember that the shortfall the Tenant has is going to be larger than you imagine it. Link to comment Share on other sites More sharing options...
SPEEDTWIN Posted October 25, 2007 Report Share Posted October 25, 2007 One thing to consider is if the council bond the deposit the tenant hasnt got any of their own cash tied up so when they leave (it can and does happen) why should they make the effort to leave it in good order. I have seen some properties left in s--t order for this reason thats why i allways insist that HB tenants supply their own deposit. Harsh i know but you have to protect your property. Link to comment Share on other sites More sharing options...
mad_maz Posted October 25, 2007 Author Report Share Posted October 25, 2007 Thank you all for the replies. Lots of useful advice for me to mull over. Unless I have problems letting this property, I have no intention of putting HB T's into it, though I do let some properties to them. I had never encountered this type of bond before, but I will be better prepared going forward if I am approached about it. Keep up the good work you guys - before I 'chanced' across this site, I had no one to ask advice from Link to comment Share on other sites More sharing options...
Trenners Posted October 25, 2007 Report Share Posted October 25, 2007 Hi all, Speedtwin said "One thing to consider is if the council bond the deposit the tenant hasnt got any of their own cash tied up so when they leave (it can and does happen) why should they make the effort to leave it in good order." I disagree with this comment. The Council use their money to underwrite the tenancy BUT they invoice and chase the tenant for any money actually claimed by the landlord to repair the property. So the tenant's money, ultimately, is at stake. J4L said "One thing to add to Mark's post aswell is that the PTD )done by the Rent assessment people) never ever agrees with what you are setting the rent at. Unless yours is massively undervalued that is, so remember that the shortfall the Tenant has is going to be larger than you imagine it." This is not the case in my area. The local rent assessment people get regular data from local letting agencies (including mine) to ensure that their assessments are fair. In my experience - I have always achieved the same rent (and often more) from HB tenants as I have from private tenants. Also ... the great thing about HB tenants is that they never leave (therefore 0 void periods) EVEN WHEN YOU WANT THEM TO LEAVE !!! <Very big Grin> Mark Link to comment Share on other sites More sharing options...
Simon Dewsberry Posted October 25, 2007 Report Share Posted October 25, 2007 "This is not the case in my area. The local rent assessment people get regular data from local letting agencies (including mine) to ensure that their assessments are fair. In my experience - I have always achieved the same rent (and often more) from HB tenants as I have from private tenants." Wow .....that's a first !!! Never happened to me ...always less....but then, i am not cheap with rent !! Simon Link to comment Share on other sites More sharing options...
SPEEDTWIN Posted October 25, 2007 Report Share Posted October 25, 2007 Hi Mark I stand corrected on the council chasing the tenant for any repairs/works paid for. But i can only go on my experince on 2 tenants that came with a buisness we took over I'm sure they were told at the start by the council that would happen but by the time they moved out they most likely forgotten. But i bet they would not have forgotten if they had £700 of their own money to come back. I'm not knocking HB tenants, I've got about 50+ on the books. Just out of interest what area are you in mark? I'm down here on the southcoast. dave Link to comment Share on other sites More sharing options...
Trenners Posted October 25, 2007 Report Share Posted October 25, 2007 Hi all, It is very interesting how individual Councils differ. I'm based in Swindon. Thanks for the comments etc Mark Link to comment Share on other sites More sharing options...
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