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  • Legal FAQs

    Tenancy with no deposit

    I'm currently going through the process of purchasing a property with a sitting tenant. The AST signed 4 years ago states that a deposit was to be taken but I am told that none was and they agreed between them for one to not be taken. 

    I feel a bit uneasy about having to take over an AST which says a deposit is taken and have no deposit. Is this something which I need to rectify by getting a new AST signed for when I take over the property?
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    You will need something signed by the tenant stating no deposit was paid (or it has been refunded) otherwise the paperwork shows a deposit was paid and there is no deposit protection paperwork. This could cause all sorts of problems down the road (including fines and not being able to serve a section 21 notice until the tenant accepts a refund of the deposit).

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    I forgot to say that you should get the signed statement from the tenant before you purchase, so it is something your solicitor should get for you.

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    If you do buy don;t forget to serve notice(s) compliant with s48 & s3.  Or no rent due to you (s48) and possible fines & criminal record (s3).

    Given apparent missing paperwork it might be wisest to "encourage" tenant to sign new AST with ALL paperwork correct (ALL!!) . Best way to encourage? Lower rent, much ( MUCH! ) cheaper than long-drawn out court arguments if there was a problem.

    And check - with tenant - when they 1st moved in: If early enough it won;t actually be an AST ( AT so no s21..) or even "Rent Act" so nigh on impossible to evict..

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    As you will be the new landlord, the existing AST will end. So you will need to issue new AST in your name, which allows you the opportunity to record zero deposit taken. 
    If it were me, I'd want either a new deposit lodged or an insurance policy like Zero deposits.
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    No:  Buying a property does not end an AST.

    Under Landlord and Tenant (Covenants) Act 1995 s3

    https://www.legislation.gov.uk/ukpga/1995/30/section/3

    - because in law the new landlord takes on the benefits and liabilities of the old landlord.


    Tenant does not have to agree to any changes in tenancy (other than change of landlord) nor to any new AST. 


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