FREE tenancy agreement
FREE landlord softwareWe changed our thinking. Did we really want our properties registered on a TDS (Tenancy Deposit Scheme) database? Why do we need to take a security deposit, with all the hassle of the TDS and possible loss of money via an arbitration process.
There is a perfectly good legal system that solves the issue of student tenants not paying for damage, lack of cleaning or rent during or at the end of a tenancy.
It's called a guarantor. A guarantor is over 18, a UK house-owner and has a regular income, which is sufficient to meet their potential liabilities. Don't mess around with an overseas guarantor. It may be impossible to recover a debt. What if your potential tenant is an overseas student and doesn't have a UK guarantor? Tell them to find a UK guarantor or another property to rent.
A guarantor is often a parent, who is checked out by a credit reference agency. They will pay any demanded outstanding debt within 14 days or face the prospect of a court case and the likelihood of not being able to get credit or insurance in the foreseeable future. A powerful reason for paying up should the student tenant default on their obligations.
The guarantor and landlord create a deed of guarantee, which is a legally binding separate contract to the tenancy agreement. No need for arbitration, landlord fines, unable to serve a section 21 notice, wrong wording in the tenancy agreement and so on.
Most student tenancies require the group to be jointly and severally responsible for the payment of rent and other charges. Make sure in your deed of guarantee that the guarantor is also jointly and severally responsible. A useful arrangement should one or more guarantors default on their payments.
On signing the contract we now charge each tenant a perfectly legal non-returnable administration fee of £50. That's £200 upfront in a four-bedroom house for any future expenses. Add to this a £20 fee for the credit check. We use the company 'Rentchecks', they are quick and efficient.
Our student tenants have leapt at the opportunity to pay only £200, rather than the usual security deposit equivalent to one month's rent.
At the end of the tenancy, if necessary, we intend to send duplicate letters for charges simultaneously to both the tenant and guarantor. In the letter we will detail the reasons for the charges and note that if the tenant fails to pay within 14 days we will demand the guarantor pays.
We cannot legally harass tenants for payment, however we expect their guarantor to do the chasing on our behalf! If the tenant fails to pay we can legally hassle a guarantor!
The new approach hasn't yet been tested. Next summer in 2009 we will see whether our experiment pays off. We are quietly confident that if a student doesn't pay charges, their guarantor (or other guarantors), often mum or dad, will pay, once the consequences of not paying are fully appreciated. There is also the added bonus of an additional £200 upfront admin fee!
Posts
4 comments:
Makes sense! Why bother collecting a deposit that you can't even hold on to or make use of - that sits in the TDS coffers. Everyone else charges admin fees for this, that and the other, why not landlords? Also its non refundable and it increases your cash-flow.
I wonder what's the biggest 'admin fee' we could charge?
Speaking as a potential guarantor, your post and subsequent comment reduce still further my opinion of landlords who milk students and their families. Yes, they are not always model tenants, but at least with a deposit system, they stand a chance of getting their deposit back if they have treated the property reasonably during their tenancy. The guarantor based approach you are proposing is weighted heavily in the landlord's favour. I suppose the only lever would be for a guarantor to contest the demand in the small claims court if an unscrupulous landlord made a specious claim. As for viewing fees as a way to increase cashflow - despicable. There is a letting agent in Glasgow demanding £100 for a credit check and £50 for a guarantor agreement - gross profiteering in my opinion. I told them to stick it.
A major local student-letting agency had a simple, cheap inventory prior to the introduction of the Tenancy Deposit Scheme. A student group used to pay £30 for a faded photocopy of a brief inventory. Not any more.
Current deposit returns that have gone to arbitration demonstrate that landlords, who have a solid case, will lose if they cannot produce good quality evidence. Many landlords now charge students in excess of £150 to hire an inventory clerk. These ‘new’ inventories are professionally designed to win the responsible landlord’s case at arbitration.
We gave verbal feedback at property inspections. Not any more. We now leave a written report in duplicate and sometimes a photograph, which we all date and sign. This increases administration, but it provides further evidence.
After check out we would later send a bill to the tenant, which was often contested. Not any more. We are introducing, with caveats, an estimated charges sheet, which we all sign at check out as evidence to guarantors that the tenants have accepted estimated costs for additional cleaning or damage.
The introduction of the Tenancy Deposit Scheme has forced landlords to consider the professional development of their business. How much is a landlord’s time worth? Twenty five, fifty pounds or more an hour? A new breed of landlord is now passing on genuine costs to the tenant, which were absorbed, ignored or forgotten about in the past.
Finding a more appropriate level for legal charges and developing an evidence trail is becoming the norm as we celebrate the emergence of the more knowledgeable and professional landlord. Tenants (and guarantors) will find it increasingly more difficult to avoid higher fees in the future.
It may only be a matter of time, before the person who posted the comment will find that they are telling the majority of landlords where to stick it and then asking them where will they live?
And for Non-uk students what do you suppose? Because I don't have access to a UK guarantor but have 2 parents working and living in the EU. What am I supposed to do?
Post a Comment