by Ed Firmin
Posted on Monday, September 21st, 2015 at 19:51
As a landlord, you don’t have to take a deposit from your tenants. Although it tends to be the norm to do so, there has been a wave of landlords deciding to forgo taking a deposit so they don’t have to deal with the hassle of having to register it with a deposit protection scheme.
Some have preferred to use a guarantor instead of insisting for money upfront. I can see how this might work, imagine students having to answer to their mum or dad if they have to fork out for damage they’ve caused. I don’t want to be a fly on the wall when that conversation takes place.
But is it a wise thing to do? Students in particular, don’t have too much money, so offering a property without a deposit makes it very attractive, and you probably won’t be left needing a tenant for very long.
But what happens if you are left at the end of a tenancy and there’s damage? You do have the right to start a County Court claim against the tenant to try and reclaim compensation. However, this process can be extremely time consuming, and if you don’t have a forwarding address, then will be nigh on impossible, as you can’t start proceedings without one.
So you could be left hundreds of pounds out of pocket quite easily and all for the sake of trying to save some time by not registering with a deposit protection scheme.
However, if you use a letting agent, then they will usually handle all the administration for you, so if that’s the case, then it does seem like a no-brainer not to take a deposit.
I’ve also found that students tend to look after the property better if they know that their money is at stake – and if there is a dispute at the end of the tenancy, they can be reassured that it will be dealt with properly, as all schemes offer a free resolution service.
So in my experience, getting a deposit up front is the wisest decision. The amount of money is protected in the event of a dispute, and the landlord isn’t faced with having to start legal proceedings if they even can. There’s plenty of students available, so you shouldn’t have a problem renting it out.
Getting a letting agent to handle all the admin associated with a deposit protection scheme really does seal the deal for most landlords.
If you’d like some advice on whether or not to take a deposit, and how deposit protection schemes work, then please do get in contact with me here, I’m happy to offer advice on what’s best for you.