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By Spencer Gordon, Jan 29 2016 02:16PM


According to a new report from the Cebr, 15% of landlords are sitting on £514m of unprotected deposits.


Despite government intervention to make it a legal requirement for landlords to protect renters’ deposits in one of the government backed schemes, new research carried out on behalf of financial comparison website money.co.uk by the Cebr (Centre for Economics and Business Research) reveals that 284,000 landlords have failed to do so. Research estimates that these landlords are sitting on £514 million of deposits that should be protected by an official third party service.


With approximately one in five (4.6 million) households in the UK now privately rented and the average protected deposit at £1,040, the total value of deposits paid by tenants and placed in protection schemes by landlords has now reached a whopping £3.2 billion. Despite the risk of fines for landlords who fail to protect their tenants’ deposits, 15% are still failing to do so running the risk of a £2,400 penalty. Landlords that flout the rules could together be earning up to £8.5 million a year in interest on unprotected money, while leaving themselves and their tenants with no third party protection when their agreement comes to an end.


What is deposit protection?


It is mandatory for all landlords to protect deposits for assured shorthold tenancies via a government backed tenancy deposit scheme. They must also give tenants prescribed information about where their deposit is protected, who they are renting from and how they raise a dispute. Different approved deposit schemes are used in England and Wales to Scotland and Northern Ireland but they all operate in a similar way. The schemes give landlords and tenants access to a free dispute resolution service if things go wrong when the tenant moves out, eliminating the need for court action in many cases.


The government imposed deposit protection schemes to stop landlords unfairly taking money out of deposits for things such as wear and tear or pre-existing damage when tenants move on. With this protection in place, an alternative dispute resolution scheme will step in and assess the case and make sure any money held back by the landlord is a fair deal for both the tenant and the landlord.


Hannah Maundrell, Editor in Chief money.co.uk comments: “Renting is a money minefield and with troubled times ahead for the buy to let market, the problems caused by ‘dodgy landlords’ are only likely to get worse. While many landlords are doing the right thing and protecting deposits in one of the official government backed schemes, a worrying amount of money is falling through the cracks and far too many tenants are being left vulnerable.


Renters must take control and ask landlords which protection scheme their money will be stashed in before signing on the dotted line. Existing tenants must ask for proof their money is protected if their landlord hasn’t given them the correct written documentation.


It’s not right that tenants are left responsible for taking their landlord to court if their deposit hasn’t been protected. The government needs to step in and take decisive action. Introducing a compulsory register listing every landlord that rents out property in England and Wales would be a start. This works for Scotland and Northern Ireland and it seems crazy this hasn’t been brought in across the UK. Add in tenants’ ratings and reviews to this too and you have both the beginnings of a solution that helps renters make an informed choice about who they’re handing over buckets of cash to; and the foundation for policing landlords that are currently going unchecked.


That said, it’s not just renters that stand to benefit from deposits being protected; after all landlords need a safeguard against renters that misbehave too. I can’t understand why any landlord wouldn’t do this; it doesn’t have to cost too much to place money with a tenancy deposit scheme and could save so much hassle later on.”


If you have any questions on tenants deposits, whether you are a landlord or a tenant, then please feel free to contact ourselves at Spencer Gordon Lettings 01704 460160.


By Spencer Gordon, Jan 17 2015 10:50AM


Size is not always the main consideration, quality and location are more important. Investing in new-build flats, old houses or typical suburban terraces all have merit in different ways, it depends on your investment objectives, timeframes and budget. Before investing there are numerous things you need to research including – but not limited to – cash amounts, mortgages and rates, fixed costs (such as service charges in flats), potential repairs and improvements, furnishings, gross and net yields, plus likely returns on capital employed.

Houses seem to be more popular than flats, larger bedrooms are better than singles, good nearby transport links are also useful and double-glazing is becoming a requirement for most tenants. Location of the property is also vitally important - the main drivers are access to train stations, good shops and restaurants and in the case of growing families, good schools.

The condition of property should also be considered. Tenants want dry, structurally sound properties in good condition (cracked fittings, marked walls, damaged appliances, grubby kitchens and bathrooms are all a turn off). Think carefully about the size and layout of the accommodation too. Most tenants will dislike small living spaces, odd shaped rooms and bathrooms without natural light. And remember, tenants have a strong sense of rental values so the days of landlords setting the rent to cover their mortgage are gone and they must therefore buy wisely.


A Buy to Let (BTL) property should look good from the outside (kerb appeal). If the inside is immaculate but the outside isn’t, you will struggle to get people through the door. Ideally the property should be semi-detached and have gas central heating and a shower. Double-glazing is another benefit.

Think about the age of the property. The younger the property, generally the less maintenance you will have. For example, if you purchase a Victorian property it is possible you will have to rewire the property at some point, therefore I would strongly suggest that BTL landlords have the gas and electric checks done on the property before Exchange of Contracts. If problems are found the cost of rectifying the issues could potentially come off the agreed sale price.


2 and 3 beds are the most popular (with 2 beds usually giving a better return on an investment), but it is essential that you understand the BTL market and complete all your homework before purchase. I would urge all BTL landlords to carry out a cost analysis before committing and have sufficient funds set aside for potential void periods and major repairs (a new boiler could cost around £1500, if you cannot afford to replace it then don’t buy the property). A handy tip is to base your sums on the property being tenanted for 10 months a year, if you can afford two months void, then if it is tenanted for 12 months, great!


If you would like some advice about buying to let, whether you are a landlord with an existing portfolio or someone thinking of investing in the Southport rental market for the first time, please email me on chris@spencergordon.co.uk or pop into our office on Post Office Avenue, Southport.


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