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LettingFocus

Unbiased buy to let, property investment and letting coaching, mentoring, advice and seminars for landlords from top selling property author and media commentator.

Tenancy Deposits and Inventories by David Lawrenson of Letting Focus

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Mydeposits.co.uk, celebrating its second birthday a while back, revealed that a massive nine out of ten tenants get their money back in tenancy deposit dispute cases. And as the average amount in dispute in tenancy deposit cases was £733, that’s quite a lot on money being lost by landlords.
I’ll bet that the vast majority of those landlords did not have a professional inventory drawn up.
The best way to make sure that you aren’t one of those landlords is to have a proper professional inventory done and to “manage the end of tenancy” in a professional way.
And that’s important because in disputes about the return of deposits the only thing the adjudicators will use will be the inventory document.
If there is no inventory at all, the tenant will always win and if the inventory lacked sufficient detail the tenant will probably win too.
So let’s look at inventories in more detail.

Property Inventories Are Not All The Same
Of course, there are inventories and inventories.
Now, I’ve seen some duff property inventories in my time and some really detailed ones too.
Often the duff ones are done by letting agents using untrained people who have no idea how to do a proper inventory - so if you are using a letting agent ask to see proof of a previous inventory to check quality and level of detail. .
A good inventory should be done at both the start and end of the tenancy (ideally done by the same independent third party) and it should list the state and condition of everything in the property and the make and model number of each and every appliance. Every chip, mark and scratch should be noted on the inventory. Anything that is not clean should be noted too.
With a clear inventory there can be no room for dispute - either the tenant damaged something, or he didn’t or it was down to fair wear and tear. Simple!
A good professional inventory on a 2 bed property can be done for less than £100.

Managing the End of a Tenancy
“Managing the end of tenancy” means that in the last month of the tenancy you as the landlord or your agent should visit the property and make sure the tenant understands that they must leave the property in the same condition they found it (fair wear and tear accepted) or face the cost of putting it right.
At the same time, it is good practice to remind them of the state and condition and degree of cleanliness when the tenancy started so that they can make sure it is like that when the check out inventory is done too.
It is better you give them a reminder to clean up and they can put it right before the tenancy ends than end up in a nasty dispute because even if you win, disputes are time consuming.

Offer
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.

To find details of our NEXT SEMINAR AND NETWORKING EVENT for Landlords and Property Investors on 4th November click here:
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To read blogs on related topics, please click on a suitable Category button at the bottom of this post.

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 money.
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 because I have been a landlord and property investor for over 25 years.

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This blog is updated roughly once a week usually on a Monday or Tuesday.

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Tenancy Deposit Schemes 6 Months On by Letting Focus

How are tenancy deposit schemes faring 6 months after they started?
At a recent speech I gave to a trade association, the question of tenancy deposit schemes was debated strongly – so I thought it was time that we looked at this again.
Just to recap, if you take a deposit on a NEW tenancy that started on or after 6th April 2007 in England or Wales you have to protect that deposit in one of the tenancy deposit schemes.

Different Sorts of Tenants Deposit Protection Schemes
There are two types of tenancy deposit schemes: a “custodial” scheme where a third party holds the deposit; and an “insurance” scheme where the landlord may hold it.
You have to tell tenants which scheme they are in within fourteen days of receiving the deposit. If you don’t join a scheme, penalties include having to pay the tenant an amount of three times the deposit. Also, you will be unable to regain possession under the so-called “accelerated possession procedure”.
Now, the custodial scheme is free - the running of it paid for by interest on landlords’ deposits, whilst there is a cost for the insurance scheme option.

TDS Insurance Scheme
However, the insurance scheme does have the neat advantage that it allows landlords to hold onto the deposit (rather than pay it into a scheme as is the case with the custodial scheme).
And with the insurance scheme, only if at there is a dispute at the end of the tenancy must the landlord lodge the disputed amount with the scheme.
If you use an agent, just make sure - ask for proof - that they have protected it in the scheme. Or even better, do this yourself.
There is just one custodial scheme at http://www.depositprotection.com/ (Tel 0870 7071707) but there are two insurance-based schemes. One is run by Tenancy Deposit Solutions at http://www.mydeposits.co.uk/ (0871 7030552) and the other is run by the Dispute Service Ltd http://www.tds.gb.com/ (0845 226 7837) and is mainly targeted at agents, though both landlords and agents are free to join any scheme.
The new schemes make it even more important that landlords do a thorough inventory at the start of tenancies, to reduce the chances of disputes at the end.

6 Months On
So how is it going after 6 months?
Well, latest figures from a reader survey for “Landlord” magazine show that 23% of landlords are choosing not to take a deposit at all, 49% are going for the Deposit Protection Service (DPS) (the custodial scheme) while of the insurance based schemes, the clear favourite seems to be the Tenancy Deposit Solutions scheme with 17% with the Dispute Service accounting for 1.4% of respondents to the magazine survey
Another 8% of respondents have opted for separate insurance based solutions which fall outside the formal tenancy deposit schemes.
Rather scarily, claims seem to be running higher than anticipated in the custodial scheme. Also, rather worryingly, the Residential Landlords Association report that of 2,000 claims, only three have proceeded to dispute resolution but none has yet been to adjudication. Oops!
Of the 2,000 claims, 400 were ‘single’ claims, whereby either a landlord or tenant can ask the DPS to settle the deposit in the absence of the other.
Again, this figure is far higher than was anticipated. (Many of the 400 claims are made by landlords after a tenant has left, owing the last month’s rent.)

Statutory Declaration
Landlords should note that with the custodial scheme, they can only recover the money by filling in a Statutory Declaration from the scheme and getting it witnessed by a solicitor, which is a real pain.
By contrast, the process for ending a deposit registered under the insurance based Tenancy Deposit Solutions seems much easier from my experience -and I am personally surprised that more landlords have not bitten the bullet, paid the fee to join an insurance based scheme (about £30 per deposit once you have paid the small joining fee) which would at least give them control of the deposit and easier access to it at the end of the tenancy.
Maybe, some are too mean to pay the fee.

Admin
Now, I am the first to say that the admin involved with the Tenancy Deposit Solutions is a bit of pain, For a start, you are supposed to write to tenants and get a deposit protection certificate signed for each deposit, and keep a copy (as if landlords and tenants have got nothing better to do!)
Also, you are supposed to give a tenant’s alternative address to the scheme (though I have found they will often waive this onerous requirement.)
All a bit of a pain - and it adds up to a lot of work, especially for those in the student and / or HMO market, where turnover of tenants is high, because landlords are supposed to notify and protect a deposit each time a new agreement is made and also notify the scheme if the “lead tenant” changes. (And it is because of the workload that some landlords are using alternatives such as separate insurance based alternatives which fall outside the formal schemes.)

Not Too Bad
But now I have done deposit protection in the insurance schemes a few times, it’s not too bad -which is what delegates at the speech told me too.
But the extra admin has a cost. So, I am now charging tenants for all the "on boarding admin" and reference checks - something I used to do for free.

ABOUT LETTINGFOCUS.COM and DAVID LAWRENSON
We are LettingFocus.com - the landlords’ 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 unreguated 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. I can also explain how to reduce the risk of getting a bad tenant.

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Copyright: David Lawrenson 2007. This blog is updated once a week

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Tenancy Deposit Schemes Will Pass on Info to HMRC

I’ve written previously that one of the reasons for interest in buy to let is that pensions have become less attractive as a savings vehicle following the Chancellors raid 10 years ago on the tax credit on dividends paid out to pension funds.
Of course, buy to letters will, if they know what they are doing benefit from a range of tax exemptions on capital and income taxes.
But, in due course, however, the government will come after landlords for more taxes too.
And so, it has come to pass.
Tony Levene reminds us in Saturday’s Guardian that the providers of the new Tenancy Deposit Protection schemes providers will have a duty to hand over to HM Revenue & Customs details of who is renting out property.
HMRC can request this info under the Taxes Management Act 1970. Of course, HMRC will also know that the rough value of the annual rent is about 12 times the deposit.
So watch out, Gordon is on the warpath for his slice of the buy to let pie.
For Tony Levene’s full article, please see here: http://money.guardian.co.uk/weekly/story/0,,2072495,00.html

MORE ABOUT LETTINGFOCUS AND WHAT WE DO

LettingFocus.com is the home of landlord information.

Hello, I’m David Lawrenson.
I have been a landlord and property investor myself for over 25 years and am author of “Successful Property Letting” – which has been the UK’s top selling property and buy to let book for the last 3 years.
At LettingFocus.com, we help landlords and property investors make money in property by coaching them in ways that work, which are ethical and which involve minimal risk to the investor.
We pride ourselves on giving independent unbiased buy to let advice on either a one to one mentoring / coaching basis or through our occasional group seminars.
Unfortunately, in the UK today, property advice in the UK is still largely unregulated and what counts as “good advice” is too often more about making the promoter money than giving useful information to the investor.
With no links to property firms, developers or bridging loan providers we can advise on where and what type of property to buy for investment and when to buy it. We also show you how to manage tenants properly.
At a corporate level, we also provide consultancy for banks, local authorities and social housing providers – helping them with their landlord facing or buy to let product strategies. We also write for property websites and are regularly quoted by the media.
We have written articles for numerous publications including The Independent, The Telegraph and quality landlord websites.

AT OUR WEBSITE LETTINGFOCUS.COM:


THE HOME PAGE OF THIS BLOG click here: Blog
THE HOME PAGE OF OUR MAIN SITE click here: LettingFocus Home Page
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NEXT SEMINAR AND NETWORKING EVENT for Landlords and Property Investors:
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For general info on our SEMINARS AND CONSULTING click here: Property Seminars, Networking Evenings and Consulting
TO READ CLIENT TESTIMONIALS – both commercial and private click here: Testimonials
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Tenancy Deposit Schemes A Guide - Part Two

How Will the TDS Schemes Work in Detail?
There will be two types of tenancy deposit scheme. First, there will be a “custodial scheme” where a third party will hold the deposit and pay out at the end of the tenancy on the terms agreed between landlord and tenant.
The second type of scheme is called "the insurance scheme" and it's this one that will probably be more attractive to landlords
Under this type of scheme, the landlord gets to keep the deposit.
Then, if at the end of the tenancy there is a dispute, the landlord will have to pay the deposit amount into the insurance scheme. where it is then held until both parties come to an agreement - with the amounts agreed being paid out by the administrator of the scheme.
The scheme will have a dispute resolution procedure which will be free to use but if the landlord and tenants can't agree, then a court could decide how the money should be split, with the administrator having to follow the courts decision.
The insurance kicks in and will pay out if the landlord fails to pay the deposit into the account - in which case the scheme and the insurer would then puruse the landlord for recovery of the money and the landlords' membership of the scheme would be terminated.
More on this later this week.

MORE ABOUT LETTINGFOCUS AND WHAT WE DO

LettingFocus.com is the home of landlord information.

I’m David Lawrenson, a landlord and property investor myself for over 25 years and author of “Successful Property Letting” – the UK’s top selling commercially published property book for the last 3 years.

Services to Businesses and the Public Sector

Primarily I am a consultant to banks, local authorities, social housing providers and other organisations – helping them with their landlord facing or buy to let product strategies and services.

For example, I help banks improve their buy to let mortgage lending practices and I help housing association / local authorities find private landlords (private rented access schemes, local letting agency models etc.)
I also write for property websites and am regularly quoted by the broadcast media.

Services for Private Landlords

We also find some spare time to help landlords and property investors by coaching them in how to make money in the private rented sector using ways that work, which are ethical, fair to tenants and which involve minimal risk to the investor.
We pride ourselves on giving independent unbiased buy to let advice on either a one-to-one mentoring / coaching basis or through our occasional group seminars. With no links to property firms, developers or bridging loan providers we can advise on where and what type of property to buy for investment and when to buy it. We also show you how to manage tenants properly.

AT OUR WEBSITE LETTINGFOCUS.COM:

THE HOME PAGE OF THIS BLOG click here: Blog

THE HOME PAGE OF OUR MAIN SITE click here: LettingFocus Home Page


For general info on our CONSULTING click here: Consultancy and Seminars


ONE TO ONE PRIVATE CONSULTANCY click here: Property Mentoring


NEXT SEMINAR AND NETWORKING EVENT for Landlords and Property Investors:
Next Property Investment Seminar and Networking Event

We have OFFERS on a range of services and products for landlords too; click here including landlords insurance, tenant referencing, tenancy agreements and more: Services and Products for Landlords

TO READ CLIENT TESTIMONIALS – both commercial and private click here: Testimonials

BUY “SUCCESSFUL PROPERTY LETTING” click here: Buy the Book at Amazon plus anything else you fancy at Amazon.co.uk

To JOIN our Free QUARTERLY NEWSLETTER
simply send an email to [email protected] - 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 TO OUR WEBSITE?

IF YOU SELL SERVICES TO LANDLORDS, YOU COULD BE A PARTNER ON OUR AFFILIATE PROGRAMME.

PLEASE GET IN TOUCH!

See our TWITTER PAGE: http://twitter.com/LettingFocus

Copyright of Blog:
David Lawrenson 2007. This blog is updated roughly once a week usually on a Monday or Tuesday.

TO VIEW RELATED POSTS select a “Category” at the bottom of this page.


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Tenancy Deposit Schemes - Start to Our Guide

One of the key measures bought in with the Housing Act was the introduction of what are called Tenancy Deposit Schemes.
From 6th April 2007, all landlords in England and Wales who take deposits and whose tenancies fall within the provisions of the Housing Acts (which includes all tenancies with a rental value of less than £25,000 a year) will have to join an authorised tenancy deposit scheme.
The idea is that these schemes will protect tenants’ deposits from rogue landlords who don’t pay up at the end of the tenancy.
Over the next few weeks, on this blog, I will look at how the different schemes will work and why the government is bringing in the changes.
You should not ignore the new system becuase if you take deposits on a new tenancy from April 6th but don't join a tenancy deposit scheme you will struggle to regain possession of your property and you will be liable to pay the tenant three times the value of the deposit.
Scary stuff!
So look out for more info here and use the Categories at the bottom to navigate to more info on tenancy deposit schemes.

MORE ABOUT LETTINGFOCUS AND WHAT WE DO

LettingFocus.com is the home of landlord information.

I’m David Lawrenson, a landlord and property investor myself for over 25 years and author of “Successful Property Letting” – the UK’s top selling commercially published property book for the last 3 years.



Services to Businesses and the Public Sector


I am a consultant to banks, local authorities, social housing providers and other organisations – helping them with their landlord facing or buy to let product strategies and services.

For example, I help banks improve their buy to let mortgage lending practices and I help housing association / local authorities find private landlords (private rented access schemes, local letting agency models, research work on the PRS etc.)
I also write for property websites and am regularly quoted by the broadcast media.


Services for Private Landlords


We also find some spare time to help landlords and property investors by coaching them in how to make money in the private rented sector using ways that work, which are ethical, fair to tenants and which involve minimal risk to the investor.
We pride ourselves on giving independent unbiased buy to let advice on either a one-to-one mentoring / coaching basis or through our occasional group seminars. With no links to property firms, developers or bridging loan providers we can advise on where and what type of property to buy for investment and when to buy it. We also show you how to manage tenants properly.

AT OUR WEBSITE LETTINGFOCUS.COM:

THE HOME PAGE OF THIS BLOG click here: Blog

THE HOME PAGE OF OUR MAIN SITE click here: LettingFocus Home Page


For general info on our CONSULTING click here: Consultancy and Seminars


ONE TO ONE PRIVATE CONSULTANCY click here: Property Mentoring


NEXT SEMINAR AND NETWORKING EVENT for Landlords and Property Investors:
Next Property Investment Seminar and Networking Event

We have OFFERS on a range of services and products for landlords too; click here including landlords insurance, tenant referencing, tenancy agreements and more: Services and Products for Landlords

TO READ CLIENT TESTIMONIALS – both commercial and private click here: Testimonials

BUY “SUCCESSFUL PROPERTY LETTING” click here: Buy the Book at Amazon plus anything else you fancy at Amazon.co.uk

To JOIN our Free QUARTERLY NEWSLETTER
simply send an email to [email protected] - 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 TO OUR WEBSITE?

IF YOU SELL SERVICES TO LANDLORDS, YOU COULD BE A PARTNER ON OUR AFFILIATE PROGRAMME.

PLEASE GET IN TOUCH!

See our TWITTER PAGE: http://twitter.com/LettingFocus

Copyright of Blog:
David Lawrenson 2007. This blog is updated roughly once a week usually on a Monday or Tuesday.

TO VIEW RELATED POSTS select a “Category” at the bottom of this page.

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