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  • Deposit Protection

    Existing tenant with no deposit

    Hi Folks,

    I plan to buy a BTL with a long-term tenant in situ.

    I’ve met the tenant and am satisfied with her history and don’t anticipate too many problems when I take over (although she is quite untidy).

    The vendor (her current landlady) never took a deposit from her when she took her on 12 years ago.

    I would like to have a deposit. I assume she is entitled to refuse as this is a change to her existing conditions / agreement.

    What’s the situation here? Can I insist on a deposit or does she have the right to continue as before?

    Any suggestions as to what I could do?

    Thanks,

    Alex

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    She can refuse, you can s21. Although with a T that has been there for that long the latter would be like shooting yourself in the foot - plus any damage they might do is dwarfed by the reasonable wear and tear over that period which diminishes the importance of a deposit in that respect - but does give you a cushion in respect to if they have payment issues.

    Offer to take it installments ( but don't fall foul of deposit protection legislation ) - or they don't want to pay a deposit just put the rent up a bit more?

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    DISCLAIMER just my personal opinion - for legal advice consult a qualified professional grown-up.

    Great reply, Owen. Thanks!

    You hit the nail on the head - I don’t want to S21 a long-term tenant.

    I just wanted to standardise the business and also make her think twice about leaving the place in an absolute state like she has done previously.

    In the grander scheme, the longevity of the tenancy is more important than the odd cost here and there for maintenance and tidying.

    Appreciate your help. Cheers!

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    Having a standard process is certainly the way to go when you don't know a person & their long term history - reduces risk to you.

    But this business is all about individuals and people - so knowing when to deviate away from the standard way of doing things can be really important.

    On the flip side, if changes are to be made, then at the start of the relationship can be the place to set expectations of how each party expects to be treated.

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    DISCLAIMER just my personal opinion - for legal advice consult a qualified professional grown-up.


    First things first

    Try and obtain RGI on the tenant.

    Then once achieved state you want two months  rent as a deposit.

    But what you will do is allow the tenant to miss paying 2 months rent as the rent payment will be the deposit.

    It will mean two DPC.

    Then you advise the tenant that there will be no rent increase for a year but the two months rent will need to be repaid over the coming year.

    So at the end of the year the tenant will have 2 months deposits and all rent paid up.

    Then you can issue a S13 to increase the rent for the next year.

    If the tenant defaults you have a lovely RGI policy to cover you.

    Job done!


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    Thanks Paul!

    That’s a creative way of doing it!

    Will give it some thought and see if I can make it work.

    Cheers,

    Alex

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    Tenant been in situ for twelve years and paid rent on time.  You could easily offend the tenant by asking for a deposit and they may have problems raising the money.  I would say leave as is, the amount of security the deposit would give you is significantly less than a reference from the existing landlord.


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    Thanks EssexLL,

    Yeah, I know the tenant doesn’t want to move so I don’t think offending her would be an issue.

    I just think she’ll struggle to raise a deposit.

    Like you said - knowing it’s a good long-term tenant with the vendor’s reference is probably worth more in itself than one month’s rent.

    Thanks for your input. Much appreciated.

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    Just my thoughts on this .

    The tenants credit could well of changed over 12 years .

    I have had tenants who have had a tenancy with me for long time and passed credit checks .When

    they have moved on I have found  that they have judgements I knew nothing about .

    At the very least you should get checks done.

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    Yeah, good call (although as I mentioned earlier, I don’t actually want her to leave so an eviction would probably hurt me more!)

    I think the previous landlady was a bit too lenient when it came to rent being paid on time.

    I don’t have the patience for late-payers. I want the rent on time and I want the place kept in a reasonable condition.

    Ah well - we’ll see what happens....

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    Is this place at a bargain price, a diamond in the rough etc as from what you've said so far it doesn't sound like it will be plain sailing.

    It sounds like taking on a 12 year old car with no service history or warranty - will you be wanting to be holding the parcel when the music stops?!


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