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  • Property-a-holics

    Unintended consequences of new deposit cap

    Yes, the act stops you from getting anyone to pay more than 5 weeks deposit. See paragraphs 1(1), 1(9) & 1(10) of the Act - https://www.legislation.gov.uk/ukpga/2019.../1/enacted - which define a relevant person as:

    (1)A landlord must not require a relevant person to make a prohibited payment to the landlord in connection with a tenancy of housing in England.

    (9)In this Act “relevant person” means—

    (a)a tenant, or

    (b)subject to subsection (10), a person acting on behalf of, or who has guaranteed the payment of rent by, a tenant.

    (10)The reference in subsection (9)(b) to a person does not include—

    (a)a local housing authority within the meaning of the Housing Act 1985 (see section 1 of that Act),

    (b)the Greater London Authority, or

    ©a person acting on behalf of an authority within paragraph (a) or the Greater London Authority.

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    Great - Thanks for the detail and clarification .

    They got that angle covered then it seems

    Back to the drawing board I guess

    Its going to hurt  more than it helps in a number of cases

    Not such a free  market in this country as  i thought

    Previously those whose personal profile and background criteria that fell  below par may have had a chance to bolster their application by using money.  Now they will be refused as they are not allowed to pay their way out of a  problem . That affects them more than it affects me ultimately  .

    So badly behaved dogs,  Adhd children prone to punch doors, poor credit history, sufferers of Parkinson who shake and may spill stuff on carpets , dementia patients , incontinent elderly   and many  other very unfortunate medical conditions or other perceived negative personality traits which may  mark an application down will potentially lose out now.

    Imagine a son who says my mum has got Parkinsons but is still independent but we realise she may cause more damage than the average person as she always spilling stuff when she shakes so we are happy to give you 3 x 850 as an extra  deposit to protect your asset as we totally understand and realise its an additional risk for you . We have to say  - sorry I would love to help  them and on May 31st I could have offered you my home but the risk is just too great now and the government actively prevents you helping your mum out in this way .




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    Jonathan Clarke. http://www.buytoletmk.com

    I can see Shelter coming for that one along the lines of:

    1 - Benefit Tenants have less easy access to Guarantors.

    2 - Benefit Tenants are mainly women.

    3 - Therefore requiring guarantors is secondary discrimination.

    Then they will feed some Kool-Aid to the politicians and the media, who will swallow it hook, line and sinker.

    ie Shelter essentially prioritising the welfare of tenants behind the attraction of destroying the PRS.

    ML

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    I've been thinking this through for a few days now and I think made some progress about how I will proceed.

    As a reminder the issue that causes me concern is that a 5 week deposit may prove inadequate to cover tenant default and or damages and so could easily leave me/the landlord out of pocket.

    Seems to me that while deposit replacement insurance does not appear to offer any benefit in my situation (anyway I always steer clear of tenants who struggle to raise a deposit sum as it tells me something worrying about their finances!), however rent guarantee insurance would reduce my risk . Guaranteeing the rent in case of late payment means the whole deposit is retained purely for damages.  The cost to me is fairly mimimal at around £100PA which is 0.6% of annual rent.

    If tha market would stand it, I could increase the rent by say 1% to include the admin cost, and unfortunately I say to the conservative government, that additional cost will be born by the tenant as a direct result of the 2019 Tenant Fees Act. Of course my new tenants will retain 3 weeks deposit money so they have some initial benefit in return.


      

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