A house sitting on a pile of money, with a pen and calculator to symbolize holding deposits

Posted by Admin - 28/04/2016

 

Holding Deposits

At the point when a tenant has made a worthy offer on your property, it is a good idea to take funds as a holding deposit for the property while you do the credit checks, confirm references and set up the tenancy agreement.

A holding deposit is proof that the tenant is intent on taking the property and that they haven’t put counter offers on other properties.

A holding deposit can be as much or as meager as you feel happy with, however a “typical” amount can be from £100 to £500, depending upon the estimation of the rent.

It’s vital that you disclose to the tenant that on the off chance that they pull out of the arrangement they may lose a some or the majority of their holding deposit. You ought to place this in writing by making an agreement when you take the holding deposit, which should ideally be by bank transfer. Try not to acknowledge cheques, which they can cancel.

Once the tenant is prepared to move in, you should subtract the holding deposit from the primary month’s rent.

You must not make the error of expressing that the tenants deposit is “non-refundable”, which is what some agents tell clients when taking holding deposits, as this could fail to uphold trading standards regulations.

In the event that the tenant has a change of opinion and doesn’t take the property, you should give back their holding deposit short of any cost to you and any loss of rent you’ve endured as a consequence of their decision.

In the event that the tenant chooses to pull out of the arrangement and unless they have paid independently for credit checks, you can deduct the expense of these from the holding deposit alongside the expense of setting up a tenancy agreement, carrying out inventories and check in reports.

Maybe justifiably tenants are hesitant to hand over funds to a complete outsider until they have the keys to a property, or a signed tenancy agreement. So what do you do if a tenant declines to pay a holding deposit?

All things considered, you have a few alternatives.

You can take a risk and consent to lease them the property whilst crossing your fingers that they don’t decide against your property, yet in the event that you do this you ought to approach them to pay ahead of time for credit checks and references so you don’t wind up out of pocket.

On the other hand, you can acknowledge their offer, however, disclose to them that the property won’t be secured in their name until they’ve passed the credit checks and signed the tenancy agreement and that you’ll keep on doing viewings on the property meanwhile. Ideally, the likelihood that you’ll get a more substantial offer will urge them to hand over a holding deposit.

A third however in-ideal option is to dismiss their offer and keep on marketing the property until you discover tenants that are willing pay the holding deposit.

A holding deposit does not legally need to go in a government registered scheme as they are only kept for a specific period of the tenancy and not for the whole length.