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Tenancy Deposit Schemes and Tenants Bonds by Lawrenson of LettingFocus.com

To find details of the NEXT SEMINAR AND NETWORKING EVENT for Landlords and Property Investors on 4th November click here:
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Tenancy deposit protection schemes are given bad press by the world at large but mainly because of a lack of understanding.
For me, the benefits of tenancy deposit schemes seem to far outweigh the cons.
1.) The custodial scheme is free to both landlord and tenant.
2.) Insurance based schemes are cheap if the landlord wants to hold onto the deposit – at a one off charge £30 per tenancy agreement with no additional to pay if the tenancy agreement lapses into a statutory periodic.
3.) Adjudication is quick, simple and effective. It is also flexible with no requirement for inventories – although the more evidence supplied the better. The majority of claims/disputes are settled within 6 weeks.
4.) The landlord continues with the deposit process as before - thus provides buy-in for the tenant.
5.) No restriction on tenant types.
6.) It is backed up by law!
7.) No intervention by a third party if the landlord/tenant sort out their issues between themselves – if an insurance based tenancy deposit scheme like MyDeposits is chosen.

Insurance Bonds
These days you will see quite a lot of promotion of what are called "insurance bonds".
In essence these bond schemes - which are always linked to rent guarantee insurance products - do away with the need for a deposit but there are some big downsides.
The biggest drawbacks are
1.) If you get into a dispute with the tenant over damage it is the insurance company that steps in to sort it out - and often they are not good at doing this.
2.) Should you really let a property where no deposit is taken anyway? If the tenant cannot afford a deposit, the risk of non payment of rent and damage to the property will be greater.
3.) Most times people on Housing Benefit / Local Housing Allowances and other groups like students are not covered by insurance bonds as the insurance companies deem them to be too risky.
Eddie Hooker of MyDeposits, a tenancy deposit scheme says, "I think like all products, tenant bonds (linked to rent guarantee insurance products) have their place in the market especially for landlords trying to attract tenants who struggle to find the deposit – although I would question whether you want to let your property to a tenant who cannot afford to move in. "
I agree.
Landlords as always, need to read the small print but using a registered tenants deposit scheme is not difficult, restrictive or cumbersome.
We like the MyDeposits scheme best. http://www.mydeposits.co.uk/

Inventory Offer
To avoid disputes over deposits in the first place it is essential to have a proper professional inventory check done.
We will look at this in much more detail in next weeks' blog.
But this week we have a special offer from Nick Lyons of leading inventory managers Nolettinggo (http://www.nolettinggo.co.uk/) exclusively for LettingFocus.com customers.
If you book an inventory or check in with them up to 15th December 2009 and quote LettingFocus they will carry out a mid term inspection on the same property free of charge. This offer is not available on line – please call 0845 659 9980 and quote LettingFocus.

ABOUT LETTINGFOCUS.COM and DAVID LAWRENSON
We are LettingFocus.com - the property experts.
I’m, David Lawrenson, the author of “Successful Property Letting” which for the last 3 years has been the UK’s top selling property book.
What’s unique about LettingFocus is that I offer independent unbiased
property seminars covering property investment and letting because unlike most people in the buy to let and property “advice” business I am not linked to a property company, developer, agent or bridging loan financier.
I can tell you where to buy (which areas), what type of property to buy, when to buy, how to buy property at a low price, how to make sure you get tenants who are going to pay the rent and how to manage a rental property to make £s at my one to one consulting service.
I can also comment on “No Money Down” Schemes and “Buying Below Market Value” methods too.
I can answer all your questions on letting property too because I have been a landlord and property investor for over 25 years.
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