Do think that tenants should get interest on their desposit

(21 Posts)
NoseWiperExtraordinaire Thu 23-Jan-14 17:33:06

I agree it doesn't seem fair that responsible tenants and landlords in effect pay for the acts of more feckless ones.

I guess a deposit scheme is really insurance for both tenant and landlord. So in theory a fee split between both to take out the scheme seems fair to me, and for the tenant to earn interest on the amount held, since it is their money!

But I've no idea how that would work, or reasonable that would be financially in practice.

I wonder how profitable these deposit schemes are?

CaterpillarCara Thu 23-Jan-14 16:47:39

I think you / they don't get the interest because the interest is what finds the deposit scheme and arbitration, etc.

holidaysarenice Thu 23-Jan-14 15:30:23

You don't get interest because the deposit scheme gets it! Its how they make money!

Caitlin17 Thu 23-Jan-14 13:26:47

If you're in Scotland it is definitely not earning interest. I'm about 99.99% the official ones in England where you place the money same as in Scotland don't. The other style in England allows the landlord to hold onto the deposit but he has to pay into an insurance scheme so not sure why he would pay you interest if he's had to pay the insurance premium.

ihategeorgeosborne Thu 23-Jan-14 13:21:45

I'm sure our current landlord said that our scheme's earning some interest, but I'm not sure where he keeps it. Will try and find out

Caitlin17 Thu 23-Jan-14 13:16:53

I used to place deposits in a separate account and at the end interest was added to the deposit. It was just a basic account but it did get some interest and the tenant got the interest.

In Scotland now I have to place it with a scheme provider (there is no choice of the type although there are 3 schemes) The schemes use the interest to pay their running costs. Please feel free to complain to Eck if you don't like it.

Mia4 Thu 23-Jan-14 13:09:48

The government wouldn't back the idea. Something for nothing- no way! We are lucky we get our Lisa's. Good as.it would be for me as a tenant a protected interest scheme I can never ser happening.

Mia4 Thu 23-Jan-14 13:03:44

Which the high interest accounts would have to be given tha

Mia4 Thu 23-Jan-14 13:01:54

I know topseyt I responding to the ops idea of putting her tenants deposit in a high interest non-protected account in her name. I would not go for it at all. The only way op could do that in the UK would be illegally but in other countries laws may not be so tight.

Topseyt Thu 23-Jan-14 12:20:51

Mia4, landlords are now legally obliged to lodge all deposits with a government protected schemes. The penalties for those who do not are very severe. They can be sued for around 3 times the value of the original deposit if they have not complied.

It is all explained on the DPS site too. Your fears were reality for a number of tenants in years gone by, with landlords and dodgy estate agents disappearing with the deposits and never being seen again. It was the very reason the legislation was introduced, though there are still those who seem unaware of it, perhaps ignorance, fecklessness or lack of research.

FredFredGeorge Thu 23-Jan-14 12:14:11

Current interest rates are so low that the interest generated covers the cost of managing the fees, in past times interest rates have been higher and deposit protection have provided interest to the tenants.

The whole point of arbitration is that there is not someone in the "wrong", there is just a disagreement on the cost/damage etc. Creating a financial penalty for using arbitration will simply increase the power of landlords to the detriment of the weaker.

Mia4 Thu 23-Jan-14 12:13:09

While you sound lovely there I'd no way I'd trust a ll to have my deposit without it being in a protected scheme. A protected

Topseyt Thu 23-Jan-14 12:11:49

Go onto the DPS website. It no longer has to be a custodial deposit. You can do an insured one, where I think you have more choice over where it is kept. I don't do that though. I feel safer with it being kept "off-site" anyway, and me having as little to do with it as possible beyond the initial payment to the DPS.

www.depositprotection.com/

Topseyt Thu 23-Jan-14 12:07:09

I am another landlady. Not all schemes charge the landlord to lodge the deposit. Protecting the tenant's deposit in a government approved scheme has been a legal requirement in the UK since 2007.

I use the Deposit Protection Service precisely because it is free for landlords to use. I don't see it paying interest to the tenant, but that isn't the issue for me anyway. The issue is that the deposit is protected, and kept as "damage" money in case all is not well at the end of the tenancy, not whether it pays interest or not.

Holdthepage Thu 23-Jan-14 12:04:52

I use the DPS custodial scheme & there is no charge to either LL or tenant. www.depositprotection.com

Welshcake77 Thu 23-Jan-14 12:00:50

I live in a country where it is a legal requirement for LLs to put deposits from tenants in an account where it will accrue interest. The money cannot be touched until the contract is terminated and the money plus interest is returned to the tenant (unless of course there are any disputes over damage etc). I think its a great idea, especially as deposits here are 3 months rent, so its generally quite a lot of money!

OldDaddy Thu 23-Jan-14 11:44:15

Some schemes do - When we got our deposit back after 8 years is was around £200 more than we put down - i queried with the scheme and they stated that it was interest unfortunately it was the estate agents that sorted that side out so I cant remember who ran the scheme.

ReallyTired Wed 22-Jan-14 12:50:09

"You are the nicest LL in the world. Got any houses in North Yorks? "

Sorry, I own any property that far north as it would be too much hassle to manage. I have lovely tenants who generally stay with me for years.

I was hoping that someone could find me a nice secure desposit scheme that does pay interest.

You are the nicest LL in the world. Got any houses in North Yorks? smile

etoo Wed 22-Jan-14 10:28:52

It would be nice if they did, but I don't see that it's a right that any money placed with an institution should magically create new money. Tenants have bigger problems that should be prioritised.

ReallyTired Wed 22-Jan-14 10:22:37

I'm getting a new tenant and I have been looking online for a decent rental desposit protection scheme. All the schemes charge the landlord and give the tenant no interest.

I want open a high interest account (OK, there is no such thing at the moment!) so that I return the tenants' desposit back with interest. Even 1% interest would be nice for the tenant.

I am in favour of secure desposit schemes, but I feel there should only be charges for arbitration if there is actually a dispute. The party who is in the wrong should pay the costs of arbitration. I think its a pity that banks and building societies are not offering a decent product.

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