Zero deposit guarantee and ceasing of letting agent

[LandlordsFirst]

Hello,

I'm ditching my property management agent and will be self-managing my rental property. Currently, the tenants have a zero deposit guarantee with a company that serves as their deposit (the equivalent of five weeks' rent). There are some clauses in our previous agreement which I may need to change and need some advice on.


"Because the Tenant has opted to purchase the Guarantee, certain parts of this Agreement in relation to the Deposit shall have no effect whilst the Guarantee is in place. The Deposit has been recorded as £0 in recognition of this." - does anyone understand what this means as earlier in the agreement the depoist amount from the tenants is stated as five weeks' rent...? Also, should I be concerned about this?

"The Agent receives a commission fee from ZD where the Tenant takes out the Guarantee. This is a percentage of the total annual premium. The Agent will inform the Tenant of the sum they are paid by ZD on receiving a written request from them. The Tenant should contact the Lettings Support Centre if they require further information." - as I will no longer be using an agent was/is this clause any of my concern? I don't think it is.

What has confused me most is the letting agent wanting details of my tenancy deposit scheme.
They have been quite strict about this and said tenancy cannot change without these. I have passed these details on and they have stated the deposit will be transferred directly from their to my scheme.
As I am not really familiar with these types of zero deposit guarantees, does it seem I am missing something? From an ignorant pov, it seems the letting agent is trying to keep the policy commission from the tenants. I guess this isn't my concern, but are these zero deposit guarantees ok for landlords? Don't quite get how a guarantee can be transferred to my tds.

 

[Frank the Insurance guy]

This sounds like an insurance policy paid for by the tenant, so that if there is a call on the deposit, the insurance company will pay.

Not sure how the mechanics work - does the insurance company have to put money on the tenancy deposit scheme?

I would start by asking the letting agent to confirm that they have 5 weeks deposit in the current scheme, to transfer? If the deposit is there and they have said it will be transfered into your scheme, then the deposit is there and in place, so do not see quite how the zero deposit guarantee fits with this?

You really need to ask an expert on this - I appreciate you are probably doing this on your own to save letting agents costs, but I would suggest you spend on legal advice, to make sure you don't miss something or regret it later!

 

[agentx]

Is there any reason why the contract cannot just continue as is, bearing in mind you are named as the landlord on it? If it continues as is, then nothing needs to happen, you have merely taken the agent out of the equation - not uncommon.

If so any zero deposit scheme would normally continue alongside the agreement as is.

With no change of tenant, property or landlord I see no reason for the agent to make a fuss about this, or for you to do anything other than contact the zero deposit company to confirm your interest.

The ZDC will already have your details as the landlord so that should be a formality. Thereafter just ensure you have acknowledgement in writing from the agent that they are no longer managing agent, and have payments made to you and your tenant informed.

I don't see any of the contractual matters being problematic because, again, you are the named person on the agreement. All the legal jargon you quoted is there to ensure that the zero deposit scheme is not mistaken for a cash deposit under the current deposit laws.

 

[MBE2017]

Is there any reason why the contract cannot just continue as is,

I would recommend talking to a good solicitor to get your own AST made up for you, and to ensure the deposit, if any is transferred correctly. Landlords have been fined £4k just for not putting deposits is such schemes, even when they have been returned in full, so this is not something worth getting your terms and conditions incorrect over.

Add to the above huge changes coming in law giving tenants more right, where section 21 will no longer be able to be used for no fault evictions etc, this is a very fluid area legally speaking atm.

Generally your tenants will gain periodic tenancies, ie continue until they wish to end them with two months notice, you as landlord will only be able to evict them under certain circumstances, such as selling the property, breach of contract.

 

[agentx]

Respectfully MBE, On a scale of 1-100 where 100 is eliminating all risk out of life and 1 is skydiving without a parachute, your advice is somewhere near 100. Anyone that pays a solicitor probably upwards of £300 for a standard AST is wasting their money.

I have attended courts every year for over 20 to deal with eviction matters, with a variety of different contracts and agreements (and sometimes without). Unless the OP has good reason to believe their chosen agent is not operating within the law then my advice stands. And if it is found that they aren't? Then the OP will have a case against them for any loss incurred, backed up by the TPO.

Surely the reason some people visit sites for advise is to save lining the pockets of thirsty legal people for a few sheets of A4 printed paper?

 

[MBE2017]

Respectfully MBE, On a scale of 1-100 where 100 is eliminating all risk out of life and 1 is skydiving without a parachute, your advice is somewhere near 100. Anyone that pays a solicitor probably upwards of £300 for a standard AST is wasting their money.

Surely the reason some people visit sites for advise is to save lining the pockets of thirsty legal people for a few sheets of A4 printed paper?

The OP has to decide what they feel is right for them, I only stated what I would do, but never having had to go to court over such matters I have no experience to offer anything different.

Good legal advice, will cost admittedly but the OP has to decide if it is worth it too them. Mistakes in property can soon spiral out of control. A major problem in such disputes is where AST agreements are downloaded online and amended, but many are not fit for purpose.

I will end by saying, literally every tale of woe on this forum is from people who have not done things the correct way.