Rental Deposits

[I Told You So]

Are landlords/letting agency's legally obliged to pay interest on deposits even if the contract from 3 years ago has clause saying they do not pay interest on deposits?

Do they have to have separate accounts for deposits?

Is there a way of finding out the lender that a landlord has his mortgage with?

[laurejon]

I wouldnt know, I never had a tenant that was worthy of having his/her deposit returned let alone interest.

Most tenants cause some damage here and there and builders are not cheap these days. A small lounge can cost over 700 quid for a coat of magnolia.

[Lou G]

Hi laurejon,

May I ask your advice. We are renting and have paid a £700 deposit.

We are good tennants, even paid £25 personally to get the carpets cleaned as the flat was a terrible state when we moved in. ( Curtain poles on the floor etc, all the jobs promised to get done by the letting agency were not done.! ).

I have marked the carpet with an iron mark.! Not the best thing to do.

Would you keep £700 just for an iron mark or do you think this comes under wear and tear.? We are not moving for a while but it will come up when we decide to leave.!

Many thanks

[laurejon]

Look in the loft and see if there are any offcuts of carpet. If there are cut a round hole using a saucer or plate as a template.

Thats all a carpet fitter would do to fix it and they charge a fortune.

The answer is no I would just charge what it costs to repair.

My experiences are somewhat different, we are talking police raids for drugs with smashed in front doors and furniture burnt in the garden.

[zzg113]

Are landlords/letting agency's legally obliged to pay interest on deposits

No.

even if the contract from 3 years ago has clause saying they do not pay interest on deposits?

Especially not if there is this clause.

Do they have to have separate accounts for deposits?

No, but the Govt is trying to introduce this. In almost every other country the landlord/agent has to hold tenant's money in escrow accounts.

Is there a way of finding out the lender that a landlord has his mortgage with?

Yes, if they have bought within the last couple of years. Go to the Land Registry website, pay £2 and you can find out the above if you have the address of the property.

[Lou G]

Many thanks laurejon.

[I Told You So]

Thanks for that zzg

My brother just had a blazing row with his exlandlord over the deposit usual stuff.

Landlord started all cocky etc etc then my brother lost it and told him if hes a practising christian whys hes trying to stitch him up, and he will be informing the Inland Revenue about his little btl and the lender which was given on the land reg report because he suspects they didnt convert to a btl mortgage. The guy suddenly started gibbering and sounded completely phased while his stupid wife was shouting instructions in the background unaware of the threat that had been made.

Bottom line is my brothers going to report him whether he pays up or not as he cant stand bible bashing dumb btl'ers.

[laurejon]

You dont need to convert to buy to let mortgage.

The only problem you have renting your house out is to get approval from the Insurance company stating there are tenants.

Building Societies prefer occupied houses and do not care whether its tenants or owners.

[Gtr London FTB]

Thanks for that zzg

My brother just had a blazing row with his exlandlord over the deposit usual stuff.

Landlord started all cocky etc etc then my brother lost it and told him if hes a practising christian whys hes trying to stitch him up, and he will be informing the Inland Revenue about his little btl and the lender which was given on the land reg report because he suspects they didnt convert to a btl mortgage. The guy suddenly started gibbering and sounded completely phased while his stupid wife was shouting instructions in the background unaware of the threat that had been made.

Bottom line is my brothers going to report him whether he pays up or not as he cant stand bible bashing dumb btl'ers.    

<{POST_SNAPBACK}>

No landlord I've had yet ever bothered to do an inventory/condition report. Twice they have tried to keep some/part of the deposit. I simply tell them I will go to the small calims county court and they know without this report they will lose and have to pay costs. Needless to say I have always got my entire deposit back.

[Gtr London FTB]

Thanks for that zzg

My brother just had a blazing row with his exlandlord over the deposit usual stuff.

Landlord started all cocky etc etc then my brother lost it and told him if hes a practising christian whys hes trying to stitch him up, and he will be informing the Inland Revenue about his little btl and the lender which was given on the land reg report because he suspects they didnt convert to a btl mortgage. The guy suddenly started gibbering and sounded completely phased while his stupid wife was shouting instructions in the background unaware of the threat that had been made.

Bottom line is my brothers going to report him whether he pays up or not as he cant stand bible bashing dumb btl'ers.    

<{POST_SNAPBACK}>

I wonder how many lanlords actually declare their rental income to the Inland Revenue. I had a one try to get me to pay him £1300 rent in cash every month!

[Gtr London FTB]

Is there a way of finding out the lender that a landlord has his mortgage with?

<{POST_SNAPBACK}>

Yes, pay £2 and get a land registry report online, this will show which lender, if any, the property is financed by.

[zzg113]

No landlord I've had yet ever bothered to do an inventory/condition report. Twice they have tried to keep some/part of the deposit. I simply tell them I will go to the small calims county court and they know without this report they will lose and have to pay costs. Needless to say I have always got my entire deposit back.

Nice one GLFTB. Nifty.

My brother just had a blazing row with his exlandlord over the deposit usual stuff.

Landlord started all cocky etc etc then my brother lost it and told him if hes a practising christian whys hes trying to stitch him up, and he will be informing the Inland Revenue about his little btl and the lender which was given on the land reg report because he suspects they didnt convert to a btl mortgage. The guy suddenly started gibbering and sounded completely phased while his stupid wife was shouting instructions in the background unaware of the threat that had been made.

Sounds like you've got him by the balls........now it's time to squeeze

[laurejon]

Suprising they wouldnt declare it to the Inland Revenue seeing as they are making a massive loss surely they can offset those losses against their tax bill ?.

I thought the whole concept of running a business was to make a loss.

Ltd Company with Loan interest and expenses offset against income.

Hence the concept of two sets of books, one for the taxman and one for yourself.

[Guest muttley]

I thought the whole concept of running a business was to make a loss.

<{POST_SNAPBACK}>

The whole concept of running a business is to make a PROFIT.

[zzg113]

No wonder Laurejon thinks the route to wealth is through speculating on an unproductive asset! He hasn't got a f*cking clue about business!

[Harry Sacks]

My experiences are somewhat different, we are talking police raids for drugs with smashed in front doors and furniture burnt in the garden.

<{POST_SNAPBACK}>

'.'@$%£^£@?????? @?@?@:{:

[Blind]

you can't offset a loss from property income against your other income (assuming its no a holiday let)

You can only carry the loss forward to offset against future letting profits.

[lucky]

Dear Laurejon,

A correction to your idea that you don't need to tell the lender that it is being let out. Oh, yes you do, if you bought as an intended owner-occupier. It costs more to btl, as the risks to the lender are higher.

I failed to notify once and when by chance they found out - they had someone come round for some reason - I was informed that they were considering foreclosing the mortgage as I was in breach of the conditions. In the end, they accepted it was a mistake and simply added one or two percent to the mortgage and we carried on as usual.

When things get nasty, pity anyone who's letting out a house without telling their lender. They won't be pleased.

Lucky,

p.s. sorry to hear about your bad tenants

[laurejon]

A correction to your idea that you don't need to tell the lender that it is being let out. Oh, yes you do, if you bought as an intended owner-occupier. It costs more to btl, as the risks to the lender are higher.

I have a mortgage with the Abbey and last year was considering letting it out to work on a contract in Oz. I called the Abbey and they said it was no problem at all, no increase in interest rates as that was my primary concern as I was on a fixed rate with huge penalties.

They did say that the most important issue was to ensure that I change the house insurance policy as your normal policy does not cover outside of family.

As I say that was the Abbey, maybe others are different and I would guess that if it was a bona fide business then as with all business borrowings the rates are slighty higher.

[laurejon]

The whole concept of running a business is to make a PROFIT

Wrong

The concept of a business is for you to make a profit, not the business.

May I suggest a short course at your local college. I did just that and it certainly changed my views on how to run a business.

Key priorities in all businesses are

1. Ltd Company

2. Dont use your own money

3. Dont secure your own personal assets on the business

4. Pay your bills as late as possible

5. Tax avoidance at every corner

6. Dont ever...ever make a profit

Do the math

[laurejon]

you can't offset a loss from property income against your other income (assuming its no a holiday let)

You can only carry the loss forward to offset against future letting profits.

In fact you can people only think you cant so they dont.

Where people become confused is the difference between a proffessional Landlord and someone who just owns a property and lets it out.

A proffesional landlord will have registered his business. He would be VAT registered and comply with current accounting regulations with regard to AGM's Company Secretary and all the other stuff that goes with it.

Scenario: The business makes a profit of 2k after offsetting Loan Interest and proffessional fees. Have the wife as secretary and pay her the 2k its below the NI and Tax thresholds to pay tax on.

Scenario the Business loses 5k after offsetting your Loan interest and proff fees.

You work as a self employed plummer you can offset these losses by incorperating your plumming business and your property business under one roof. Therefore what you would have paid in tax on your income as a self employed plummer would be offset against your property taxes.

[Time to raise the rents.]

Dear Laurejon,

A correction to your idea that you don't need to tell the lender that it is being let out. Oh, yes you do, if you bought as an intended owner-occupier. It costs more to btl, as the risks to the lender are higher.

<{POST_SNAPBACK}>

I'd just like to wade in with a response to that. In the past, UK landlords paid commercial rates which helped to keep rents high & discourage landlording (for want of a better word) along with the nasty laws that were in place.

After the 1996 Housing Act guaranteeing possession will be returned to the landlord for new tenancies, the BTL loan was born & was priced a little higher than the average OO loan.

Since then BTL has proven itself as quality lending, with default rates much lower than OO defaults (owing to the credibility and financial stature of us landords).

BTL rates are now MORE COMPETETIVE than OO loans, especially for FTB's who due to their small deposits and lack of a long term history, still pay 2% & even more over the base rate.

My loans are base + .74% and if it weren't for the redemption penalty for the next 2 years, I'd head out and refinance at what is now on offer, base + .64%.

If any FTB's can get a long term low variable rate like that, I'd love to hear about it. But please, no 1 year 3% followed by 24 years 6.99% thanks.

The feeling that landlords pay a higher rate due to a higher risk is therefore a property myth and I shall now add this to the property myths thread.

[Time to raise the rents.]

On the subject of rental deposits, the current Housing Bill which should be law in 12 months from now, will make it illegal for anyone (landlord or agent) to hold a tenants deposit unless they're a member of a new scheme set up by the govt for dispute resolution.

Good news and bad news really.

I have always given back deposits on the day that I get possesion of a property back from the outgoing tenants. I wonder whether tenants can now expect that level of service, or whether delays will be incurred to comply with the new laws?

[laurejon]

I too have seen some very competitive deals for BTL's

The fact is that to get BTL loans you do need a decent amount of security and therefore the risk to the lender is far less than a young couple starting out with a 5% deposit borrowed from Granny.

Hence the reason most FTB end up with a MIP.

[Time to raise the rents.]

This is another reason why it's fair to assume that landlords will beat FTB's back into the market when they feel confident, because they can get hold of cheaper money than FTB's can. Also a fair reason why BTL has still been buying when FTB's have pulled back, because the equation is different when a different IR is used.

This is the problem experienced in Australia & other mature BTL markets, investors can move faster than OO's can & competition exists that didn't exist in the UK (not to the scale it does now) last time round.