As well as requesting cash deposits, many landlords will agree to accept a deposit guarantee product instead for ASTs. It is then up to the tenant to decide which method they wish to use; a landlord cannot insist on the tenant using a guarantee product.
Many KFH landlords will accept a Zero Deposit Guarantee (ZDG) instead of a cash deposit, whereby the tenant enters into an arrangement directly with the guarantee provider. A typical cost to the tenant is the equivalent of one weeks’ rent (non-refundable).
Whether you are working with your lettings agent on a managed or non-managed basis, KFH will ensure you comply with legislation to protect all cash deposits for ASTs, so long as you are using a KFH tenancy agreement. Before the tenancy starts, your agent will normally collect the deposit and the first rent payment on your behalf. As soon as this money clears, the signed tenancy agreement has been received from both the landlord and the tenant, have been executed and all other paperwork completed, then the tenant can move in.
When an offer has been accepted by the landlord, the tenant would be expected to pay a holding deposit .This is an expression on the tenant’s behalf of the commitment to renting the property, and the landlord would usually remove the property from the market at this stage.
For AST tenancies a landlord or agent cannot request more than the equivalent of one week's rent as a holding deposit and there are strict rules as to when or whether this is refundable, in full or in part, should the tenancy not proceed.
If the tenancy goes ahead then it is usual for this sum to be offset against the first rental payment.
Legislation surrounding tenant deposits dictates that for ASTs a tenant cannot be requested to pay more than the equivalent of five weeks’ rent as a deposit if the annual rent is under £50,000. If the rent is over £50,000 then this increases to the equivalent to a maximum of six weeks’ rent. This restriction does not apply to non-ASTs nor to deposit guarantee products (even for ASTs).
Once you or your agent have taken receipt of the cash deposit from the tenant then it will need to protected with one of the government-approved tenancy deposit protection schemes within 30 days of it being paid by the tenant. All necessary paperwork will also need to be issued to the tenant and any other relevant party within that timescale.
The deposit should be duly returned to the tenant at the end of the tenancy. You will be able to fairly deduct from the deposit any unpaid rent, cost of dilapidations that goes beyond reasonable wear and tear, but this needs to be agreed with the tenant. If there is a dispute, then the scheme may be able to adjudicate, otherwise the small claims court or an independent arbitrator may be required. For the Zero Deposit Guarantee the tenant will be asked to make payment for any agreed damages, etc. If not the scheme will make the payment to you and look to the tenant for direct reimbursement.
Moving the new tenants in
The inventory listing should be made or updated before a tenancy starts. The new tenants will be asked to attend a check-in appointment with the inventory clerk at the start of the tenancy after which they will be handed the keys. Each adult tenant should have a set of keys. The inventory clerk should note the utility meter readings on the check-in report, confirm that he/she has tested the smoke alarms in the property and that they are in working order. If you do not use a KFH-recommended inventory clerk then you will need to make sure these things have been carried out yourself.
As the landlord, you should provide instruction manuals for the various appliances and these should be made easily available to the tenant. You should leave instructions how to operate appliances that are less intuitive.
Visiting the tenants a few weeks into their occupancy can ensure they are comfortable and settling in. The visit can also allay any concerns landlords may have when taking on new tenants that they have not met before. All visits need to be arranged with at least 24 hours' written notice given to the tenants, or as per the notice stipulated in the tenancy agreement. Any visits must be with the consent of the tenant as they are entitled to the quiet enjoyment of the property. Keep in mind, not to disturb your tenant too often even by appointment.