Surety vs. Deposits

[LondonFlats]

I'm just putting my previous flat on the rental market, and am looking to start a new relationship with a letting agents.

Could the forum provide some insights in the area of 'surety' vs. a secured deposit.

I already have a tenant couple lined up, but am asking the letting agent to manage to move-in process to ensure everything is done right as I'm completely new at this. They're charging a pretty penny for it, but rather safe than sorry.

The couple I am wanting to move in is a freelancing husband (with a low / irregular income stream) and a wife who is a highly paid specialist in the financial sector (income over £65,000 / annum). They've been together for 5 years now.

The agent is proposing to structure the tenancy as a single tenancy with the wife on the agreement, and the husband as a 'permitted occupier'.

The letting agent is also proposing a 'surety' of 6 weeks rent on top of the standard 6 weeks rent secured deposit. I'm being told this surety can be held by myself rather than in a protected scheme.

The reason for the 'surety' is that they state a security deposit can't be used towards rent arrears should they arise.

So, I have two questions:

Is a surety held by me legal given the secured deposits legislation? Or is it simply another security and I'm breaching the law by holding it?

and

Does it give me more or less protection by adding the husband as a 'permitted occupier' on the lease?

I don't anticipate any issues with the couple as tenants, as I'm sure they'd be in a position to buy a property if her work didn't require some flexibility to move internationally.

Any advise and help much appreciated!

[Lawcruncher]

Change agents - NOW!

[LondonFlats]

Certainly a clear answer. Any chance you could provide some more information on how this is (obviously in your opinion) a really bad idea?

[Lawcruncher]

The "permitted occupier" suggestion shows a lack of clear thinking. Agents have in their heads (and quite rightly) that you ought not grant a tenancy to someone whose finances do not look as if they are up to supporting regular payments of rent. However, they take it too far and wish to exclude such persons from being tenants even when the co-tenant can more than cover the rent. However you look at it, tenant who looks like he can pay rent + tenant who looks like he cannot pay rent cannot possibly be worse than tenant who looks like he can pay rent. Further, you must be better off having two people liable rather than one, even if one of them is of limited means. Apart from that, if something happens to the wife the husband can walk away.

I am not sure where the agent is coming from with all this "surety" business, but it is a lot of nonsense unless he has spotted some loophole in the legislation that the rest of us have missed. If you do as he says, you risk having to pay the tenant compensation equal to between one and three times the amount you take as "surety". I cannot imagine why he does not just suggest taking a three months' deposit (if that is what is deemed necessary).

[Brb]

They're charging a pretty penny for it, but rather safe than sorry.

Please be aware that there are LAs out there operating on the same level of knowledge of LL & T law that you currently have yourself! Please do not consider yourself to be automatically safe in their hands.

The industry is unregulated. You could set up your own today.

[LondonFlats]

Thank you both, very illuminating.

I'll find another agent right now!

[Snorkerz]

I think that is a wise decision, I too am convinced that any money taken as a 'surety' would be legaly regarded as a deposit, and therefore need to be protected, with big penalties if not protected. It is not just a matter of the penalty Lawcruncher described, these claims can not be heard in the small claims track, so there would most probably be court fees awarded against you iro £1k and the tenants legal costs - £150/hr solicitors?