Deposits on rented property

[rocket377]

Was just reading a thread about deposits on rented property......

I have commercial and residential property, all leased out with proper contracts/tenancy agreements etc. However, I don't get involved with deposits.

Instead, provision in the tenants rent is made to cover what would be a deposit payment.

Seems to me that one of the things that put potential tenants off is deposits......

Anyone operate similarly?

[GreenV8S]

Seems to me that one of the things that makes tenants treat your property with respect is the prospect of paying for the damage out of their deposit.

[northwest monkey]

I'm a residential-only landlord & insist on a deposit. Depending on the credit check/references it's a minimum equivalent of 1 months rent. If potential tenant doesn't like it then they can go elsewhere. Never seemed to bother anyone bar the chancers to be honest.

[darronwall]

in my experience if they cant give you a months dipper and a month up front,they cant afford it

[rocket377]

northwest monkey said:

I'm a residential-only landlord & insist on a deposit. Depending on the credit check/references it's a minimum equivalent of 1 months rent. If potential tenant doesn't like it then they can go elsewhere. Never seemed to bother anyone bar the chancers to be honest.

Ive not got much residential, just 6 flats and 2 houses and more often than not the tenants are young public sector types who always seem to moan about having to save up for deposits. I take a bit of sympathy with them (nurses in particular!) so never get a deposit off them, but add it to the rent, say an extra £25-50 per month. Obviously this is not mentioned and is in effect hidden from the tenant, except where the sharper ones realise that the rental value is slightly over the market 'norm' (thats if theyre really doing their homework) Seems to work ok for me at the moment.

Commercial letting is a much nicer prospect though. Especially as I like buying old stty run down industrial units/farms etc and letting the tenants sort out their own decor/layout inside. That way they are spending the money on the building (kind of in lieu of any deposit) so theyre going to want to keep it nice (in principle anyway). Got quite a bit of stuff like this and it works well. The only commercial tenant who's ever given any trouble was a copper believe it or not!

Just bought a smallish 3 bed house on a sizeable plot - going to rent this out to a builder who requires a house and some storage area.....will do it under the same no deposit principle as the place is a dump at the moment.....he is going to redecorate/refurb outbuildings etc....all this until I get permission to build some posh(ish) flats on it....funny as my estate agent bloke told me that deposits are a must on new builds.......might take his advice on that one.

Interested to hear from other landlords.

[rocket377]

darronwall said:

in my experience if they cant give you a months dipper and a month up front,they cant afford it

I guess Ive been lucky so far. Not a single problem with any residential property Ive got.

I am in the fortunate position of not 'needing' the rent every month my residential stuff.....I suspect if I had a mortgage on it it might be different.

[sjg]

rocket377 said:

Ive not got much residential, just 6 flats and 2 houses and more often than not the tenants are young public sector types who always seem to moan about having to save up for deposits. I take a bit of sympathy with them (nurses in particular!) so never get a deposit off them, but add it to the rent, say an extra £25-50 per month. Obviously this is not mentioned and is in effect hidden from the tenant, except where the sharper ones realise that the rental value is slightly over the market 'norm' (thats if theyre really doing their homework) Seems to work ok for me at the moment.

Fine if they do stay the full term (even better if they stay longer) and keep paying. It does expose you to the risk of a tenant moving in and stopping paying the rent - it can take a couple of months to get them out again. If you've got the standard 4-6 weeks rent as deposit, at least that gives a bit of a buffer, and that kind of people to do that will be less likely to (or less likely to so early) if they've got a deposit tied up.