This was a question put to me recently via twitter:
Deposits, must I take one or can I just let a tenant move in and is it wise to do so?
The short answer is no, you don’t have to take deposits. Indeed, some landlords have made a positive decision not to take a deposit, so as to avoid the bother of having to protect it in a tenancy deposit scheme. For example a landlord who is also a builder once told me that as it was fairly easy for him to do any repair work necessary he didn’t see the point.
However not all landlords are builders. The general view is that taking a deposit from a tenant is a good idea as it gives the tenant an incentive to look after the property.
If a tenant leaves the property in a damaged and messy state, the landlord does have the right to bring a County Court claim for compensation. However he may not have the tenants new address (you need an address for service of court proceedings), and enforcement of CCJs is often tricky. A deposit is there, available at the end of the tenancy, a fund of money for repair work and replacement of broken and missing items.
So my view is that taking a deposit is a good idea. And I would also advise that it be taken before the tenant moves in. Otherwise you may find it difficult to get him to pay it. The time to get a tenant to do things, such as pay the deposit, sign forms etc, is before they move in. Then you can refuse to hand over the keys until he has complied. Afterwards is often too late.
But what do you think? Do you think deposits are unnecessary? Or have you found that tenants look after property better if they have a deposit which is at risk?
Glad to see clarification on this as I wasn’t sure when a new leasehold landlord said he wasn’t going to take a deposit.
Personally I think that a deposit is a good idea for the lower end of the rental market. If I were a landlord renting out in my own particular block, I’d not want to take the risk of tenants trashing the place and having to fund it out of my own pocket.
It’s surely not that difficult to place a deposit with a protection scheme is it?
Kind Regards
Sharon
It is not difficult registering a deposit, but some landlords have complained about the extra administration, in particular at the end of the tenancy when the time comes to pay the deposit out.
We have never taken deposits (even long before TDS).
We simply charge £10pw or so more for our properties. People are happy to pay it if there is no deposit. In reality very few people would ever chase damages above the value of a deposit so if you can recover this in another way then why bother with the hassle?
We have 9 properties and over 8 years have only twice wished we had a deposit. That said in both cases damages were still nominal and properties were primarily messy. On the flip side we have made circa £4k more per annum in rents which has more than compensated us for it!