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Tenants required to find guarantor instead of deposit

(45 Posts)
familygermsareok Fri 07-Mar-14 20:04:08

I'm a landlord of one property (inherited), not much experience and live geographically distant so leave most things up to letting agency. Tenants contacted me concerned as LA have told them they will have their deposit returned but must find a guarantor instead.
Guarantor must be solvent, a home owner themselves and happy to underwrite any expenses for repairs/cleaning/unpaid rent that the tenants do not cover.
I phoned the LA who confirmed they are now insisting on this for all tenants.

I am a bit shocked - I can foresee several potential problems on both tenants and landlord sides.
I cannot think of anyone I could personally ask to act as a guarantor if I was in tenants position and even if a guarantor was found who is to guarantee that they would pay up if needed. And I bet it wouldn't be the LA that paid any court expenses!

So is this common practice? Am I just being naive?

I have informed our tenants and LA that I will continue with current deposit system for them, but if new tenants are required would the guarantor system be reasonable?

Mimishimi Sat 08-Mar-14 21:34:42

It's a really stupid idea. I can imagine the time and energy involved in chasing down the guarantors for any monies owed would be tremendous. Give your custom to another LA, on the mainland perhaps?

Caitlin17 Sat 08-Mar-14 11:58:51

I got really annoyed by a letting agents, who were a firm of solicitors in Aberdeen asking all sorts of nosey questions about me when I was my son's guarantor. I had no problem being one, I didn't argue about paying for the credit check (although it is actually illegal to charge for that)

I refused to give them any personal details other than my home address and am afraid did get a bit "do you know who I am?" with them. I'm not anyone famous but the emails and office headed notepaper gave more than enough comfort and I've seen my credit report. It's as good as it gets.

I also pointed out they had messed up making the lease a Short Assured Tenancy (the one landlords can end easily) which automatically means it is the other Scottish lease which landlords pretty much can't end until tenants want to go, but I'd make sure my son did leave when he was supposed to.

Caitlin17 Sat 08-Mar-14 11:43:35

OP "yearly renewal" is not necessary in Scotland. If you grant a lease for the minimum 6 months it renews automatically at the end of every 6 months and continues to do so until one party serves notice. If the lease was originally for one year or more it renews automatically for another year.

Most leases now say they're for 6 months or a year and then month to month thereafter.

So far as legal side of it I am a solicitor. I don't tend to bother with inspections during the tenancy. I've never had problems with any of my tenants. If rent is always paid on time there's not likely to be an issue.

I don't have landlord insurance. I started renting out the first flat in 1999 and the second 18 months ago and so far have never had a bad tenant.

Lara2 Sat 08-Mar-14 11:36:36

DH is a letting agent - deposit and a guarantor are standard and obligatory if tenants received housing benefit ( or universal credit?). Best of both worlds - damages come out of deposit, unpaid rent comes from the guarantor. We have a small house we rent out and whilst the tenant takes great care of the property, we have had to go to his guarantor almost every month for the rent.

NurseyWursey Sat 08-Mar-14 11:22:57

Absolutely ridiculous. It's really hard for some people to find guarantors too. Luckily I used my stepdad. The company we went with asked really intrusive questions like how much he earns, his bank account details etc... Bound to put lots of people off.

eggsandwich Sat 08-Mar-14 09:51:30

What I would say to you also as a landlord don't accept guarantor's for your rented property, we did once it was a man who got his mother to guarantor for him, after a few months he stopped paying his rent so we went to his mother for payment and guess what! she had moved out of the country and left no forwarding details and mobile number had changed where we could previously contact her.
So the guarantor system has flaws in it, I would also say that the LA are being crafty with insisting on the prospective tenants supplying a guarantor and would think that alot of landlords will give them a wide birth.

familygermsareok Sat 08-Mar-14 09:24:31

Thank you. I will ask them all those. I really think I need to try and manage the property myself, I don't trust the letting agency at all now.
They have upset the tenants before by trying to unilaterally change their contract at the yearly renewal. I had agreed to allow some pets which I specified in original contract but LA tried to change to their bog standard no pets one. Again, all without asking me, when it was very clear that this was an individual agreement I had made with the tenants.

I really wish there was another LA locally, maybe they are so shit because of lack of competition.

How do you manage the legal stuff? Do you use a standard contract ( the kind you can download from internet) and modify it to suit you? And how do you manage regular property inspections?
I already have landlord insurance in place.

Caitlin17 Sat 08-Mar-14 02:23:56

OP Your letting agency is seriously out of order here. They have no business contacting your tenants and saying you no longer want a deposit They have no business deciding that their clients won't take deposits and will only take guarantors.

You should ask them:
What did you do with my tenants'deposit?
Why wasn't it placed in a scheme?
Why did you tell my tenants without any instructions from me their deposit was being returned?

AchyFox Sat 08-Mar-14 02:20:15

Doh blush

AchyFox Sat 08-Mar-14 02:11:28

You agree to be the tenants guarantor in exchange for the deposit.

Problem. Solved.wink

Caitlin17 Sat 08-Mar-14 02:06:01

Billy if you don’t pay your phone/electricity bill you will be cut off. If my office doesn't pay the many other businesses who supply us with goods and services they will stop supplying us.They won't continue to give us free supplies for 5/6 or more months.

A tenant can sit tight paying no rent for many months and there is nothing a landlord can do to stop supplying the "service". If there can't be guarantors for higher risk tenants the business decision won't be to stop renting out property. The business decision will be to not rent to higher risk tenants. By your argument, a valid assessment of risk and a valid way of running a business. Except that's not really what you're getting at is it? I suspect you probably think no one should be allowed to rent out a house.

familygermsareok Sat 08-Mar-14 00:59:49

Caitlin thank you, that is useful information, I was only aware of one Scottish deposit scheme.
I have no idea if the LA placed the deposit appropriately by the required date. They have always been in charge of it, I have never had anything to do with it before. Kicking myself now for not checking with them. Stupidly I trusted them to do their job.

Will just have to hope tenants are not planning court action, will find out in due course, I am sure.

I am registered as a landlord on the Landlord Registration Scheme, the one that has to be renewed every 3 years, is that the one in the antisocial behaviour act 2004 you mentioned?

I am going to find out if deposit was placed appropriately, if not I feel I have good justification for withdrawing from LA and only using them to find tenants and do viewings as you do. I think they might be unwilling to do this ordinarily but if they have completely failed in a legal requirement ( presumption at this stage I know) I will be able to indicate clear reasons why. They charge extra anyway for finding new tenants and for all inspections. I have no idea what they actually do for the regular monthly fee!
I will be able to use money saved on LA fees to pay the fine for unplaced deposit grin

BillyBanter Sat 08-Mar-14 00:42:10

neither live in nor own a property that should be.

BillyBanter Sat 08-Mar-14 00:41:41

You're right. People who neither live in nor rent a property are the ones who should be financially liable. That's a great system right there.

In other business there are some customers who don't pay up and the business has to chase them.

The housing situation in this country is fucked and increasing the number of private landlords and private lets is not the solution.

Caitlin17 Sat 08-Mar-14 00:27:49

Believe that if you like.

Not having the ability to ask for a guarantor for a student or someone newly out of school/university won't make any landlord give up. They'll just take the tenants with the better job/better credit history. There's no shortage of tenants. But as you say weigh up the risks, if that means the younger person isn't offered a tenancy then on your argument that will be just fine.

BillyBanter Sat 08-Mar-14 00:12:00

I think there are business risks involved in being a landlord. If you are not willing to take on those risks you should not be a landlord.

Caitlin17 Sat 08-Mar-14 00:01:59

You think it's reasonable a landlord should just suck up providing free accommodation for 5 plus months? For most businesses if your customers don't pay you stop supplying goods or services. A landlord can't do that.

Does it occur to you landlord might be paying a mortgage ? Is the bank going to allow non payment of that for 5 months?

Do you realise for example if during the time the tenants aren't paying rent the annual gas safety certificate falls due landlord still has to pay for that and for insurance?

Your posts are ridiculous or are you one of these people who think owning more than 1 house makes a landlord fair game?

BillyBanter Fri 07-Mar-14 23:52:11

So get out of the business.

Caitlin17 Fri 07-Mar-14 23:44:37

Billy it's not quite as simple as that. In Scotland for example it's virtually impossible to get rid of a tenant until there are 3 months'rent arrears. At that stage court action can be raised which, if not defended will add another 4 weeks minimum. A landlord potentially can receive no rent for 4- 5 months. If a tenant defends the action, no matter how spurious the grounds that can add several more months to the court process.

BillyBanter Fri 07-Mar-14 23:34:59

It's ridiculous. This is a business risk of the landlords not a risk tobe transferred to someone who takes pity on a friend or family member who can't get a flat otherwise.

Caitlin17 Fri 07-Mar-14 23:34:23

Sorry more thoughts, I only use a letting agency to do viewings, find tenants and check references. I do all the legal stuff myself. On repairs I have my preferred very reliable, very honest tradesmen and tenants are,like yours, told to instruct them direct and bills get sent to me.

Mumof3xx Fri 07-Mar-14 23:32:08

With my LA you pay a deposit of a months rent, of you are under 25 you also have to have a guarantor

Caitlin17 Fri 07-Mar-14 23:30:19

Oh and there are 3 approved Scottish deposit schemes. As far as I know they all work exactly the same way. I won't say which one I use as that might be unfair trading practice, but have a look at the web sites of all 3 and go with whichever you find most user friendly.

Caitlin17 Fri 07-Mar-14 23:27:07

OP all deposits in Scotland no matter when the lease started should have been placed by May 2013.

The Scottish courts have been ordering repayments and compensation payments. Any order would be made against you not the agency. It needs an application to be made to the courts by the tenants. Unfortunately it's in the tenants'interest to do so as it's a technical breach to which you have no defence. I hope they won't if you place it now.

Are you registered as a "fit and proper person" to be a landlord under The Anti Social Behaviour (Scotland) Act 2004?

familygermsareok Fri 07-Mar-14 22:50:58

caitlin I suspect you may be right about the LA trying to offload deposits they haven't properly placed. We are in Scotland and the tenancy began before the legal requirement to hold in the mydeposit scheme. As a new first time landlord I just left the LA to deal with everything I thought that's what I was paying them for.
My understanding is that deposits now have to be placed with mydepositscotland and as soon as it has been transferred to me I will be placing it there.
I'm not sure if the LA or myself would be liable if tenants decided to take us to court if it hasn't been properly placed. Hopefully this won't be an issue as I am now trying to sort it and so far have had a good relationship with tenants.

morethanpotatoprints and newbiefrugalgal thanks, I hadn't thought about asking them just to do annual safety checks at individual costings without the rest of the management. I'm a little worried that LA may refuse to deal with me again though if I leave them now and just use for new viewings when needed. I would also like to have regular property checks done, the tenants have been very reliable and looked after the house well(although their agreed pets have multiplied a bit) but it is reassuring to know this is continuing to be the case.
Tenants and I already manage repairs/maintenance between us as the LA have been shit at this. We have an agreement that the tenants can contact any local trades person direct when required and invoices sent straight to me. They confirm with me first for sums over £150. So LA really do sweet FA for their money angry.

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