When I wrote about tenancy deposit protection avoidance earlier this year, I did not mention one other option which I understand is being taken up by many landlords – that of taking no deposit, but two months rent in advance instead of one month.
Although there is nothing wrong with this, and superficially it seems the same, as very often the tenant will be paying the same amount of money in advance, in fact the landlord will not be protected against damage in the same way as he will by taking a damage deposit. This is because the money will be paid as rent.
The significance of this is that money paid as rent cannot, technically, be used for dealing with damage. That is not its purpose. So with a six month tenancy the tenants will pay no rent in the last two months. They do not have to – it was paid in advance. However, if they then leave the property in a mess, the landlord will have no fund of money to deal with it. In fact it is probably more likely that the tenants will leave the property in a mess. As they are not at risk of losing their damage deposit there is no reason why they should bother overmuch about the condition in which the property is left.
Better for landlords to bite the bullet and take a deposit, in my opinion. The custodial scheme, for example, is free of charge, everything can be done via the internet, and the tenants will know (as the money is being held by the scheme administrators) that their money is safe. Where is the problem?
[NB Taking two months rent instead of a deposit is now considered dangerous as it is still capable of being found to be a deposit, putting the landlord in default of the regulations]