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jeffrey
12-03-2009, 12:33 PM
I should look it up, but there's a potential problem witha taking more than 2 month's rent as a deposit.
No, there isn't. Here's why (copied from another thread):


Yes! You cannot ask for more than the equivalent of 2 months rent otherwise you could be creating a premium lease which would give the tenant potential rights of a continued occupation. Housing Act 1988 S.15 (4)(c)


1. That's not quite what s.15(4)(c) says.

2. Yes, it does define as "premium" a deposit exceeding one-sixth of annual rent.

3. However, that definition applies only for s.15(3)(b).

4. So:
a. s.15(1) states that, subject to s.15(3), every periodic AST/SAT (whether a statutory continuation or explicitly created as such from day1) impliedly prohibits assignment and subletting, and [by s.15(2)] s.19 of LTA 1927 then does not apply; and
b. if the AST/SAT is created as explicit periodic from day1, there is [by s.15(3)] no such implied prohibition if:
i. the Agreement contains an explicit prohibition to like effect; or
ii. the Agreement reserves a premium, whether a real one or merely a larger deposit deemed a premium by s.15(3)(c).

5. Result: yes, L can reserve a deposit exceeding two months' rent.

yaf201
12-03-2009, 12:42 PM
No, there isn't.

I said I should have looked it up http://www.landlordzone.co.uk/deposits.htm. I can't say if the following is correct or not, i just knew I'd seen it somewhere.

The Amount of the Deposit

The amount of the deposit should be a maximum of two months' rent. If the deposit is more than this amount it could in theory count as a premium and may give the tenant an automatic right to assign the lease without the landlord's consent.

This eventuality of assignment should be precluded by the terms of the tenancy agreement anyway, but as a precaution the deposit should be kept below two months' rent.

One month's rent is a common figure, though some landlords avoid this as it could encourage the tenant to substitute the deposit for the last month's rent - 5 or 6 weeks may be acceptable.

jeffrey
12-03-2009, 13:42 PM
The amount of the deposit should be a maximum of two months' rent. If the deposit is more than this amount it could in theory count as a premium and may give the tenant an automatic right to assign the lease without the landlord's consent.
As I explained, this is just wrong.

subjecttocontract
10-03-2011, 13:50 PM
Its been suggested to me that if a landlord takes a deposit that is larger than 2 months rent then the tenant can acquire additional rights.

Does anyone know if this is correct ? and
What rights does the tenant get ?

Thanks

Interlaken
10-03-2011, 14:07 PM
What is the rent?

Lawcruncher
10-03-2011, 14:18 PM
So far as I can recall it used to be the case in respect of pre-HA 1988 tenancies that a deposit was not allowed to be for more than two months' rent. Perhaps the suggestion comes from that.

theartfullodger
10-03-2011, 14:46 PM
My notes suggest check Housing Act, 1988, S15 - if more than 2 months Tenant has right to assign the lease (eg to a family of 7 with 3 incontinent rotties none of whom you've ever met...an extreme example I think, there is probably some other prohibition against that particular but you get my drift??)..

see...
http://www.legislation.gov.uk/ukpga/1988/50/section/15

subjecttocontract
10-03-2011, 19:30 PM
Thanks for the information everyone.

There certainly seems to be some confusion of what the 1988 Housing Act is saying.

Based on what Jeffrey has posted I'm going with X3 months deposit.