Renting without a deposit

[HawkEye244]

Hi gents,
I'm interested to know if any of you rent properties without taking a deposit from your tenant and how success this has proven to be? I will be renting my property out again soon and have found the deposit protection schemes to be largely unnecessary. If there is damage to the property and you are in good relations with your tenant (which I always am) we negotiate a few pounds, or the damage is not significant enough to bother with. There will always be odds and sods at change over, most of which is not claimable under these schemes anyway (fair wear and tear etc.)

I recently paid a tenant to leave one month early because he was trashing the property but also had developed a serious weight issue, but was still paying me, so I felt obliged to help him out by offering him one months free rent and a no quibble return of his deposit. He was a sorry case and had fallen into very bad habits despite being a sound lad. He stuck to his word and vacated and did leave the property in a good state. I'm not a social worker so felt all I could do was to offer him financial support, and it worked out alright. This is one example of where holding a deposit would be unnecessary. Even if I was to make a claim, the cost to clean up his place is probably half a day max and no significant cost anyway. Again, there will always be odds and sods needing doing at changeover anyway.

I have the sense that deposits are really only necessary where there is a serious case of property abuse, serious damage (which I've yet to experience from any tenant) and with good management and a bit of luck in not having the worst of the worst tenant, is it really necessary? Saving time on the extra paper work would be handy too.

Thoughts appreciated as always,
Hawk

 

[Bodd]

Would it not be beneficial if you took one months rent up front. Then save a % from their rent each month with the promise that they would get their deposit back and more if they looked after the property.

 

[HawkEye244]

Would it not be beneficial if you took one months rent up front. Then save a % from their rent each month with the promise that they would get their deposit back and more if they looked after the property.

Hi Bodd, it's customary to take a months rent up front anyway.
Generally it's one months rent up front + the deposit.
If the tenant pays slightly more each month but it saves them having to find the lump sum deposit at the start this is of interest to them.
There would be no deposit to pay back, just the extra money that I have put away each month in case there is a claim at the end.
The only downside to the tenant is that they pay slightly more for rent each month.
I was also thinking, I may demand the details of two guarantors as a bare minimum just in case.

 

[Mottie]

I’ve let my workshop out twice. Once for 7 years, another for 6 years. Never took a deposit but went ahead on the basis that the tenant was responsible for all services and carried out all repairs. Rent was paid on the first day they went in so always in advance. I said that either of us could terminate with a months notice on their behalf and three months notice from me. No point chasing people for money if they don’t want to be there any more. That happened when one tenant got ill and packed up and another time when I needed them out as the premises I was renting was being demolished and I needed them back for myself. Both times no problems and they both left the premises on time and completely cleared out. I also gained a complete new roof and the wooden workshop doors were replaced with a nice steel roller shutter with wicket gate. You have to pick your tenants wisely though - one individual that wanted to rent them told me it was none of my business what he was going to do in them so he was promptly told to **** right off to which he took great offence! First tenant was an electrical contractor, second one was a building company. I suppose it’s different when it’s someone’s home though.

 

[Harry Bloomfield]

You have to pick your tenants wisely though - one individual that wanted to rent them told me it was none of my business what he was going to do in them so he was promptly told to **** right off to which he took great offence!

His surname wasn't Haigh was it?

https://en.wikipedia.org/wiki/John_Haigh

 

[Brigade77]

No'1 Son runs it now but I never took on a tenant who couldn't scrape up the first months + deposit in £CASH. If they have no money then they have no money & there's usually a good reason for that !

I've no idea how they do it now & I doubt he'd tell me, I reckon I'd be happy with a stable employment history with the first months + deposit then pay the deposit back after 3mths.

 

[Mottie]

His surname wasn't Haigh was it?

https://en.wikipedia.org/wiki/John_Haigh

Not unless Haigh was a Rastafarian! I had an idea what he may have wanted it for.

 

[Notch7]

lots of landlords insist on a guarantor these days

the problem is people dont have jobs for life these days -having a good job isnt huge proof of reliability...esp when there are relationship breakdowns etc

 

[Bodd]

Ji

 

[Old Salt]

Not unless Haigh was a Rastafarian! I had an idea what he may have wanted it for.

Probably running a turfing supply company and needed some growing room.

 

[ReganAndCarter]

Not unless Haigh was a Rastafarian!

Wrong type of acid, man!

 

[motorbiking]

Would it not be beneficial if you took one months rent up front. Then save a % from their rent each month with the promise that they would get their deposit back and more if they looked after the property.

This would be regarded as an unprotected deposit and would leave you exposed.

I’ve done zero deposit before, but it can attract rent dodgers. I’ve never deducted from a deposit in over 25 years of renting and also see the scheme as pointless.

 

[johnny2007]

No way I would rent to someone who can't scrape a month deposit together.
And a guarantor is essential now that it takes months to evict a tenant via the legal route.
Pick your guarantor: they must be home owners so they can get a charge on their home in case of an unpaid ccj.
You can check that they own their property via the land registry (i think there's a £6 fee) and set a free alert if anything changes, i.e. they sell the house.

 

[HawkEye244]

Thanks for commenting. Looks to me like it's definitely an option. One less bit of paper.

 

[motorbiking]

I would never advise anyone to be a guarantor. Better for the “guarantor” to be on the tenancy agreement and jointly and severally liable or have sub tenancy rights.

It really is a very stupid thing to do - taking financial responsibility for someone you have no real control over.