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  • Deposit Protection

    Another No Deposit scheme

    And I don't think much of this one either:

    https://www.leaders.co.uk/articles/leade...sit-option

    "Under our pioneering new scheme, instead of paying a large, upfront deposit, tenants can opt to pay a small monthly fee. In exchange for this fee, tenants will benefit from:

    Deposit-free renting - move more quickly but still be covered for accidental damage* "

    * adequate tenant insurance must still be taken out before moving into any Leaders rental property

    “What happens if the tenant damages my property?”

    Landlords can rest assured that, properties marketed under this scheme will be indemnified by Leaders for the equivalent of 8 weeks’ rent – that’s 33% more protection than under the traditional deposit scheme. If there are damages at the end of the tenancy, we will liaise with the tenant during the check-out process to ensure any issues are rectified before the next tenancy begins. It’s a win-win, tenants only pay for the work that’s needed and landlords have the peace of mind that repairs are being taken care of."

    > My thoughts:

    1. As the NDO (No deposit option) is a monthly insurance premium, taken out by the tenant, the LL will lose out if it came to third party judgements as they are not the party taking out the policy.

    2. "properties marketed under this scheme will be indemnified by Leaders for the equivalent of 8 weeks’ rent – that’s 33% more protection than under the traditional deposit scheme."
    > Total carp. A LL could take out rent protection insurance that would cover them for the life of the tenancy, not just 8 weeks rent!

    3. "* adequate tenant insurance must still be taken out before moving into any Leaders rental property"

    Who decides what is 'adequate insurance'? If it's Leaders - LOL!
    I like the way they mention 'accidental damage' - what about the 'not-so-accidental damage'?

    These NDO's are the next wave of LL stitch-ups in my humble opinion.

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    Adam, I completely agree. The benefit of a deposit is that the tenant has given away the money on conditions. Therefore it acts as an incentive.

    if the tenants does not pay then I would expect more damage and higher insurance premiums making an affordable rent potentially unaffordable.

    A friend once said to me that he lets unfurnished so he gets tenants who look after the property as the furniture is theirs (and they stay longer). His rationale is that it pays to have tenants who don’t cause damage, I agree.

    If people cannot afford the deposit they cannot afford the property. 

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    Chartered Accountant, Tax Advisor and Mortgage broker

    (and BTL portfolio owner)

    stuart@johnsonsca.com

    02039077022


    I love the way they also mention that it will improve the tenants credit rating - how could this be so?

    The rent is not a purchase agreement or similar? There is no end date, and even if their were, how can rent be something that can boost an experian rating?

    There's no benefits I can see here to the LL other than pretty much guaranteed hassle when it comes to sorting out breakages at the end of the tenancy.

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    The unfurnished rental market is really small and also furniture is not so expensive, so realistically the returns for furnished rentals will be much higher.

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    Yes but my friend has done very well out of property and wants to reduce voids and damage. He finds unfurnished works well for him.

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    Chartered Accountant, Tax Advisor and Mortgage broker

    (and BTL portfolio owner)

    stuart@johnsonsca.com

    02039077022

    I agree 100%. Always offered unfurnished and always will for the reasons described. It's one less thing to worry about plus it encourages longer term tenants.

    I have always provided white goods however for new tenants I am thinking about not even offering these. Less call outs when things go wrong and allows the tenant to buy what they would like.

    The above does depend on your market though. A 3 bed house would have different needs for a 1-bed studio flat in the city!

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    What happens when the tenant stops paying the premium. I just don’t get why the agent thinks this is a good idea. Clearly they are doing it to get more business but it does not help their client.

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    Chartered Accountant, Tax Advisor and Mortgage broker

    (and BTL portfolio owner)

    stuart@johnsonsca.com

    02039077022

    The agent is doing it just to get the commissions.

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    Hi J Stuart Thomson, this is a common concern. Regardless of the annual admin fee payment, the Zero Deposit Guarantee remains in place for the lifetime of the tenancy or 10 years, whichever is longer. If the tenant does not pay the admin fee, it does not affect the landlord's cover in any way, but non payment may affect the tenant's credit history.


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    So, tenant moves in after paying bare minimum to secure the property, then cancels their ZD monthly payment immediately.

    What happens next?

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    There is no monthly payment; the admin fee is annual. The guarantee stays in place regardless, and getting the money from the tenant is Zero Deposit's responsibility, so the landlord is protected even if payment isn't recouped. Hope that makes it clearer?

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