Tenancy Deposit Schemes Can I Avoid by Asking for More Rent In Advance? Letting Focus Looks Into Whether This Is Possible
I’m going to be writing a few articles about tenancy deposit schemes in the next few weeks here on the blog.
Just as a reminder first, all NEW assured shorthold tenancies which started after 6th April 2007 in England and Wales where a landlord takes a deposit should have the deposit protected in one of the three tenancy deposit schemes the government has set up. There are fines for not complying and you cannot evict under the so called accelerated possession route.
Rent in Advance
Now lots of landlords have asked me, "Can I not just take two months rent in advance instead of one month and not bother with protecting the deposit in the scheme?"
Well, the answer is yes. There is nothing wrong with doing this. In effect, the tenant will pay over the same amount of money at the start.
However, the big difference is that a landlord won’t be protected against damage in the same way as he would if he had taken a damage deposit. This is because the money paid by the tenant would have been rent and as such, cannot be used to deal with damage disputes or disputes or about what was in the inventory etc.
So, in this scenario, in a six month or 12 month tenancy the tenants will just pay no rent in the last two months because they don’t have to – as it has already been paid in advance.
But if they leave the property in a mess or have lost items that were on the inventory, then the landlord will have no money to cover the losses.
Increased Risk
So, whilst a landlord doing this has done nothing wrong, he does significantly increase the risk that the tenants will leave the property in a mess because they have no risk of losing their damage deposit hanging over them when they leave.
Deposit schemes are quite complex. If you need detailed advice on tenancy deposit schemes or landlord and tenant problems generally ask me.
ABOUT LETTINGFOCUS.COM and DAVID LAWRENSON
We are LettingFocus.com - the property investment expert and I’m David Lawrenson, the author of “Successful Property Letting” - the UK’s top selling property and buy to let book for the last 3 years.
I have been a landlord and property investor myself for over 25 years.
At LettingFocus we offer independent unbiased seminars for buy to let investors and landlords as well as one to one advice covering all aspects of being a landlord and investing in property.
Unlike many in the still largely unregulated buy to let and property “advice” business I am not linked to a property company, developer, estate agency or bridging loan provider.
As such I am able to give unbiased independent advice on where to buy (which areas), what type of property to buy, when to buy and how to buy property at a low price.
AT OUR SITE LETTINGFOCUS.COM:
Our Events only take place twice a year.
For our NEXT SEMINAR AND NETWORKING EVENT for Landlords and Property Investors click here:
Next Property Investing Seminar and Networking Event
We have GREAT OFFERS for landlords too, Click here: Services and Products for Landlords to see our Landlords Resources (Useful Links) page. (Selling services to landlords and property investors and have a national coverage? You could be a partner, please get in touch!)
For general info on our SEMINARS AND CONSULTING click here: Property Seminars, Networking Evenings and Consulting
ONE TO ONE CONSULTING click here: Property Consulting
CLIENT TESTIMONIALS from past customers click here: Testimonials
BUY THE BOOK click here: Buy the Book at Amazon
THE HOME PAGE OF THIS BLOG click here: Blog
THE HOME PAGE OF OUR MAIN SITE click here: LettingFocus Home Page
To JOIN our Free QUARTERLY NEWSLETTER simply send an email to david@LettingFocus.com - Please note we WILL NOT send spam or sell our mailing list to advertisers!
IF YOU HAVE A SITE WHY NOT LINK TO THIS BLOG OR OUR WEBSITE?
TO VIEW RELATED POSTS select a “Category” at the bottom of this page.
WANT TO ADD A COMMENT OR VIEW OLD COMMENTS?
To add a comment to this post, simply click on “link to this post” to add your comment and to view comments of other people.
Copyright: David Lawrenson 2007. This blog is updated once a week
Just as a reminder first, all NEW assured shorthold tenancies which started after 6th April 2007 in England and Wales where a landlord takes a deposit should have the deposit protected in one of the three tenancy deposit schemes the government has set up. There are fines for not complying and you cannot evict under the so called accelerated possession route.
Rent in Advance
Now lots of landlords have asked me, "Can I not just take two months rent in advance instead of one month and not bother with protecting the deposit in the scheme?"
Well, the answer is yes. There is nothing wrong with doing this. In effect, the tenant will pay over the same amount of money at the start.
However, the big difference is that a landlord won’t be protected against damage in the same way as he would if he had taken a damage deposit. This is because the money paid by the tenant would have been rent and as such, cannot be used to deal with damage disputes or disputes or about what was in the inventory etc.
So, in this scenario, in a six month or 12 month tenancy the tenants will just pay no rent in the last two months because they don’t have to – as it has already been paid in advance.
But if they leave the property in a mess or have lost items that were on the inventory, then the landlord will have no money to cover the losses.
Increased Risk
So, whilst a landlord doing this has done nothing wrong, he does significantly increase the risk that the tenants will leave the property in a mess because they have no risk of losing their damage deposit hanging over them when they leave.
Deposit schemes are quite complex. If you need detailed advice on tenancy deposit schemes or landlord and tenant problems generally ask me.
ABOUT LETTINGFOCUS.COM and DAVID LAWRENSON
We are LettingFocus.com - the property investment expert and I’m David Lawrenson, the author of “Successful Property Letting” - the UK’s top selling property and buy to let book for the last 3 years.
I have been a landlord and property investor myself for over 25 years.
At LettingFocus we offer independent unbiased seminars for buy to let investors and landlords as well as one to one advice covering all aspects of being a landlord and investing in property.
Unlike many in the still largely unregulated buy to let and property “advice” business I am not linked to a property company, developer, estate agency or bridging loan provider.
As such I am able to give unbiased independent advice on where to buy (which areas), what type of property to buy, when to buy and how to buy property at a low price.
AT OUR SITE LETTINGFOCUS.COM:
Our Events only take place twice a year.
For our NEXT SEMINAR AND NETWORKING EVENT for Landlords and Property Investors click here:
Next Property Investing Seminar and Networking Event
We have GREAT OFFERS for landlords too, Click here: Services and Products for Landlords to see our Landlords Resources (Useful Links) page. (Selling services to landlords and property investors and have a national coverage? You could be a partner, please get in touch!)
For general info on our SEMINARS AND CONSULTING click here: Property Seminars, Networking Evenings and Consulting
ONE TO ONE CONSULTING click here: Property Consulting
CLIENT TESTIMONIALS from past customers click here: Testimonials
BUY THE BOOK click here: Buy the Book at Amazon
THE HOME PAGE OF THIS BLOG click here: Blog
THE HOME PAGE OF OUR MAIN SITE click here: LettingFocus Home Page
To JOIN our Free QUARTERLY NEWSLETTER simply send an email to david@LettingFocus.com - Please note we WILL NOT send spam or sell our mailing list to advertisers!
IF YOU HAVE A SITE WHY NOT LINK TO THIS BLOG OR OUR WEBSITE?
TO VIEW RELATED POSTS select a “Category” at the bottom of this page.
WANT TO ADD A COMMENT OR VIEW OLD COMMENTS?
To add a comment to this post, simply click on “link to this post” to add your comment and to view comments of other people.
Copyright: David Lawrenson 2007. This blog is updated once a week
Labels: TDS, Tenancy Deposit Schemes, tenancy deposits, tenants bonds, tenants deposit protection, tenants deposits
This entry was posted by lettingfocus, on
Monday, October 08, 2007.
