Tag Archives: Assured Shorthold

17Jun 2013

Property Landlord advice: Tenants Deposit Scheme rules apply.

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By Steve Roulstone

Tenants deposits

I have had cause on behalf of a member of my Family, to review an agreement on his behalf, just so he was aware of any areas that could cause problems for one of his children, due to rent a property outside of my area. Of course I am happy to do so and have over the past few years looked at several agreements on behalf of friends and Family. The agreement was clearly a standard one prepared by what appeared to be a Property owning organisation, as Landlords. The property itself was being advertised through a National Letting Agent who had been instructed to find a Tenant.

Having read the agreement I can best describe my reaction as raised eyebrows!

Firstly, notice was written as being two months. Now, my own Company once asked for the same notice, but many years ago (2005?) it was confirmed through the courts that notice only had to be one month from Tenant to Landlord and two months from Landlord to Tenant. To state that two months is required is therefore wrong and any Agent should be aware of this basic requirement.

Secondly, all deposits now have to be protected through a Government approved scheme; in this case the agreement confirms which scheme the money will be protected by. But it then goes on to state that the deposit is subject to the Landlords wishes, requirements and demands! Well this is as far away from the intent of the legislation as to be in another country.

Furthermore, it goes on to state that the deposit, at the Landlords discretion, may be used DURING the Tenancy and then the Tenant would have to replace what the Landlord saw fit to ‘appropriate’!

At the end of the day, this could just be a Landlord who has not received good advice. Advice it would seem they are in need of. But what struck me loud and clear was how a National organisation allows an agreement like this to be used, on a property they had marketed and with a Tenant that they sourced?

I find this kind of situation very depressing, even more so when you consider the call for professionalism in our industry that is currently being discussed at Government level and the manner in which organisations such as this one, which if their own publicity is to be believed are amongst the fastest growing in the Country, appear to be trading. Of course there could be a simple explanation, but it will be interesting to see what answers my relative receives to the questions they went away to ask!

I was taught right at the beginning of my training that we have a duty of care to any Tenants we deal with and in my opinion, to allow an agreement to be used which contains clauses which are just not enforceable or are just plain wrong is out of order.

There have been occasions when I have refused business because I could not accept the principles or methodology involved. At times, to remain professional, we all need to apply the same ethics. If we do not, then we can have no complaints about the weight of legislation that will fall upon our shoulders (and let’s not forget on Landlords as well) because fall it surely will if professional Agents continue to turn a blind eye to the Tenants in their hands.

09Jan 2012

Rental Property Advice: What is the Role of a Guarantor?

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By Craig Smith

The majority of letting agents in England, including ourselves, usually insist that a tenant is referenced before proceeding with a tenancy. This usually includes a credit check and background checks on the prospective tenant in order to confirm their identity and credit history.

Who are the Referencing Company?

Different agents use different referencing companies to carry out the checks and some are more in depth than others. This doesn’t necessarily mean that, by having a tenant referenced, you are guaranteed a good tenant. Everybody’s circumstances are different and can change at almost any time, whether that is 10 years down the line or 10 days into the tenancy!

Poor Credit Equals Bad Tenant?

Similarly, it is not always the case that if someone may have poor credit that they won’t be good tenants and look after the home. With the aid of a guarantor, a tenant can proceed with an application for a tenancy with the Landlord knowing they have an additional ‘safeguard’ should the tenancy go wrong.

What Does a Guarantor do?

Provided the tenant pays the rent on time (and in full!) and looks after the property, the answer is nothing! But perhaps the best way of describing the responsibilities of a guarantor is that they have the same responsibilities as the tenant but without being able to actually live at the home. This does not just include and rent arrears but also and damages or costs should the tenant fail to cover them. For example, if a tenant is not contactable at the end of a tenancy but with damages to the property. The guarantor can also be used during the tenancy if a tenant fails to pay the rent on time.

A common misconception if the length of time that a guarantor is in place for. Most Assured Shorthold Tenancy Agreements are for 6 or 12 months or maybe more and guarantors can often believe that they would only be responsible for the initial term of the tenancy. However, unless agreed otherwise with a Landlord, the guarantor could remain in place for the full length of the tenancy, whether it lasted 6 months or 6 years!

If you are about to stand as guarantor for a tenancy you should be absolutely certain that you are in a position to do so. You should also seek advice if you are unsure of any of your responsibilities before signing any agreements! 

24Feb 2011

Deposit Protection Issues: Best Practice

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By Craig Smith

Since 6th April 2007, any deposit taken for a property that is being let with an Assured Shorthold Tenancy Agreement in England or Wales must be registered with one of the three approved deposit schemes. This can sound like another hoop for Landlords to jump through but the results of not properly registering a deposit can be costly.

Does it make any difference?

In a word… yes! It is not just a case that the money has to be protected but by registering the deposit with an approved scheme, the money can be held in a secure account and is protected for both parties. Each scheme also have their own dispute resolution service which can be used as an alternative to court action if the Landlord and Tenant disagree about any costs at the end of a tenancy. The adjudication service will take into account any evidence from Landlords and Tenants, which is where a good inventory and check out report come in to play!

Tenant Find properties, who deals with the deposit?

Tenancies where an agent only finds a tenant for the property but does not manage it can sometimes be a grey area depending on who registers the deposit. Castle Estates can still register a deposit on the Landlords behalf although would not be able to get involved in any claims at the end of the tenancy. Please feel free to contact us for further information.

So what if it isn’t registered?

If a Landlord fails to properly register a deposit they can be forced to pay back the full deposit, plus 3 times the amount of the deposit to the tenant. And on top of this, a Landlord would not be able to issue a Section 21 notice requiring possession of the property. Not only would it costs 3 times the amount of the deposit, it would also take a lot longer to gain possession of the property.

When should the deposit be registered?

Any monies taken as a deposit should be registered within 14 days of the Landlord receiving it. This is regardless of whether the tenancy has already started or is to start at a later date, although if the monies are paid but the tenant backs out of the deal, don’t forget that the money should be paid back to the tenant!

Where do we go from here?

Always make sure that your deposit is protected, if it falls under the legislation. A good agent will always look after your investment as if it were there own. If in doubt, please do contact us for further advice.