A letting agent has warned landlords that they are no longer safe simply to download tenancy agreements from the internet in the belief that all will be well.
Ajay Jagota, of KIS Lettings in the North-East, sounded his warning after a Court of Appeal ruling in the case of Ayannuga v Swindell, reported on Landlord Today last week.
The case was lost by the landlord on a technicality after the tenant’s deposit had been correctly protected but ‘minor’ omissions were made from the Prescribed Information that has to be given to the tenant. This omission could have been corrected by the landlord giving the tenant a leaflet about the scheme.
Jagota said that the case sounded “like something out of an urban myth” but warned of its huge implications for landlords, since it meant the landlord not only had lost the right to evict the tenant but also had to compensate them.
Jagota, who manage properties for some 700 landlords, said: “Landlords will really have to raise their game. A tiny and apparently insignificant oversight ended up costing this landlord thousands of pounds in fines, legal fees and lost rent.
“The days where amateur buy-to-let landlords could just get a template tenancy agreement off the internet and go are over.
“The residential lettings industry is complicated and fast-changing, and if you don’t know it inside out you could seriously get your fingers burnt.”
He went on: “At KIS Lettings we don’t bother with deposits. It’s a small amount of money in the greater scheme of things – especially compared to the cost of a barrister – and it makes it easier to find tenants who might not have a few hundred pounds to hand.
“A good landlord-tenant relationship is one based on trust. By asking for a deposit you’re effectively telling someone ‘I don’t trust you not to do a runner or smash the place up’ which isn’t a great start.”
Instead of taking a deposit, KIS uses insurance and rent guarantor schemes, which Jagota says work much better.
Pointing out that the law does not actually require a deposit to be taken, he said: “They are a lot more effective at building productive, long-term landlord-tenant partnerships and offers a much more robust assurance to landlords should anything go wrong.”
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Comments
@Peripheral
My such big teeth you have - and such long words.
I fail to grasp ideals, ideas or whatever..............?!!!!
Which bit of "in this 20+ years my job has been to consider all new practices and examine them as alternatives" don't you understand? Or maybe you just think I'm rubbish at such analysis and cannot be objective and am stuck in the past? If so I can assure you there are many who do not.
If it has merits fine, and these schemes - this is merely the ltest so not a new idea at all - have been around even pre TDP.
I simply suggest if you want to put the Landlord's BEST interests first you'd seek a deposit. Ajay seemd to imply in his advertorial, as do most other people who moan about TDP, that it is an administrative nuisance.
Maybe if deposits had not been so badly misused in the past the regime would never have been needed and imposed on the industry?
These policies are an alternative - but they are second best (in my view) for the client and as ever cash is king even if sometimes someone else is holding it!!
I'm sure you could run back and forth all week with rebuttals but you still fail to grasp the ideal...
Just as deposits manifest pro's and con's, we can also pick the bones out of any alternatives but sadly the only constant is that your receptors seem impervious to new ideas.
You do what you believe is right for you, your business and your clients, an admirable act but you limit your growth by misunderstanding the evolution of the Industry. Agency is experiencing a series of radical changes that will dilute the market with competition, don't mistake entrepreneurialism as the mark of amateurs....
@Peripheral Vision
Try not to be unnecessarily personal and your popints, some of which are perfectly valid, may carry more weight.
For your information in this 20+ years my job has been to consider all new practices and examine them as alternatives. Personally I wouldn't take a deposit, or had my Landlord lived in the property I would do an Assured tenancy with Ground 1 - there are alternatives for you.
Landlords do indeed have a choice (as do tenants) so to satisfy this 'right' that you understandably support does Ajay ask his Landlords "would you like me to find a tenant that can afford a deposit or are you happy for me to find one that doesn't and we'll cover it with insurance and guarantees, which may or may not work when push comes to shove?"
No he doesn't - and of course the commission he gets from the policy sales has nothing to do with his commercial decisions either I suppose?
Why do so many spend so much time trying to get aroiund every new piece of legislation and regulations instead of simply getting on with complaice with them?
Yes the deposit is to protect the landlord - but whose money is it?
There is another statement Ajay can ask, this time to prospective tenants, which is
"Good news you won't need a deposit, which would have been returned in full if you prove to be a good tenant, but we will have to sharge you £150 for an insurance policy as a non refundable premium"
who pays for this effective insurance product?
Now gently untangle that wedgey Industry Observer and try to wrap your head around the concept that landlords have a choice. Try to imagine that there is scope outside your narrow thought process where other agents can look beyond the'Industry standard' and perhaps adopt a different approach.
To not even consider an alternative way of achieving protection for your client landlord, but to denigrate the services of those that do displays a lack of imagination perfectly married to your dinosaur mentality.
This market is borne out of the frustration of the current system, mired in legislation and focused on protecting the tenant when, ironically the reason for the requirement of a deposit is to protect the landlord.
To envision a alternative where both can be achieved without vast sums of money changing hands and at times being misappropriated would appear to be beyond you. One that eliminates the possibility of a landlord being denied access to his property because of a minor omission as the article describes.
You've always taken a deposit in your 20+ years, doesn't mean thats the only way and It certainly doesn't mean thats the only way for another 20+.
A great idea?
a. It is as old as the hills and various other identical schemes have been around for a few years.
b. It also means tenants pay money they do not get back. At least if they have a deposit and are good
tenants it does not cost them anything.
c. It means the tenant has to pay whatever Landlord Assist's referencing fees are.
d. It also means the Landlord is stuck with the quality of that referencing. Are they going to be that thorough
and spend as much of that fee on a captive audience?
e. I assume Landlord Assist have confirmed they will keep the full references for 6 years and that at any
time, on demand, if needed in pursuit of a LERG policy claim with another insurer, that Landlord
Assist will make them available?
and so on and so on with the weaknesses of such schemes.
For example if the tenant cannot scrape together a deposit how are they going to pay the rent the first month they run into financial difficulties through lack of overtime, short time working, loss of bonus etc etc?
Ajay if you really want to give a good service and product to your Landlords then nothing focuses the tenant’s mind as money, so take a deposit. In 20+ years in this industry I have never had a tenant accuse me of not trusting them because I asked for a reasonable deposit.
In fact most of the time the tenant raises the question of the deposit and how much it will be before I do. That is of course because it is industry standard practice.
So too is a deposit on a hire car – if you are on the Cote d’Azur and Hertz want a deposit on your cabriolet hire car in case you drive over the border to Italy you refuse and say you are insulted they don’t trust you are you?
Tell you what – if you do you’d be walking to Italy!!
This is a waste of time advertorial and nothing else from someone with previous form in that respect.