Can a landlord ask for a deposit greater than a month's rent?

Doom

One question, can a landlord ask for a deposit greater than a months rent, say rent is 800e, deposit 1200e...thanks

ABajaninCork

I'm not sure of the form here - think one month is normal. But I know in London, landlords will ask for at least six weeks if not two months as deposit.

quietsailor

Doom wrote: »

One question, can a landlord ask for a deposit greater than a months rent, say rent is 800e, deposit 1200e...thanks

In the continent there are 3-6 months rent asked as deposit. There was 2 long thread about this in the last 2 weeks. The gist of that thread was with bad tenants not paying the last months rent it seems landlords are asking for 1.5 to 2 months rent as deposit in high rent parts of Ireland now.

Edit: it's in the thread "advice on finding good tenant for my property" I'm posting from my phone so don't know how to link to it

djimi

Doom wrote: »

One question, can a landlord ask for a deposit greater than a months rent, say rent is 800e, deposit 1200e...thanks

They can ask for as much of a deposit as they want. Whether they will get it is another thing!

Marcusm

They can ask for a year's rent to be prepaid if they wish - al of this is a matter of commercial negotiation.

Doom

Thanks for the replies, I think next time round I'm going to start asking for 2 months up front. If all is good with the tenant I'll return one months deposit after 6 months.

djimi

Doom wrote: »

Thanks for the replies, I think next time round I'm going to start asking for 2 months up front. If all is good with the tenant I'll return one months deposit after 6 months.

What would be the point of doing this?

The_Morrigan

Doom wrote: »

Thanks for the replies, I think next time round I'm going to start asking for 2 months up front. If all is good with the tenant I'll return one months deposit after 6 months.

Make sure you have that included in any lease you have in place.

smcgiff

djimi wrote: »

What would be the point of doing this?

What's the point of any deposit?

djimi

smcgiff wrote: »

What's the point of any deposit?

Im just curious to know what they think is going to happen in the first 6 months that would warrant needing two months deposit to cover, and why the risk would decrease after 6 months?

smcgiff

djimi wrote: »

and why the risk would decrease after 6 months?

He'll have got six months rental and will know his tenant is likely to be able to afford the rent. The second month deposit is a greater buffer.

He'll also have a better idea after six months whether the tennant is keeping his property in good condition. If he is he'll less likely need the second month's deposit.

murphaph

I wouldn't return the second month's deposit OP. Deposits in higher demand areas are going to naturally tend towards 2 months over the coming years IMO as LLs realise they have very little power once the tenancy commences. They need to exercise their power before that, which includes requiring higher deposits to mitigate against the risks of delinquent tenants (the state doesn't really care about this, so the LL has to use whatever he has at his disposal to cover himself)

Doom

The idea is i'll know my tenants by then, I can ask them to vacate without legal issues within 6 months if they give problems. If there are bill or rental issues, i'll be less exposed with two months or so deposit.
I think it will become the norm too.

djimi

Doom wrote: »

The idea is i'll know my tenants by then, I can ask them to vacate without legal issues within 6 months if they give problems. If there are bill or rental issues, i'll be less exposed with two months or so deposit.
I think it will become the norm too.

Not if the have a signed fixed term lease you cant.

FWIW I dont think that it will become the norm in this country until they sort out the issue of deposit security, and for the moment I think you are considerably reducing your rental market by asking for more than a months rent, as a lot of tenants will not see it as a risk worth taking.

Sleepy

There was something on Newstalk this morning about such a system being established. Couldn't give it my full attention as I had the kids in the car chatting to me at the time...

While I'd be happy enough to pay 2 months deposit (if I could afford to do so) to an intermediary, there's no way in hell I'd trust a landlord to return 2/3k at the end of the tenancy.

djimi

Sleepy wrote: »

While I'd be happy enough to pay 2 months deposit (if I could afford to do so) to an intermediary, there's no way in hell I'd trust a landlord to return 2/3k at the end of the tenancy.

I feel exactly the same. I cant afford to walk away from that sort of money, which effectively is the risk that is being taken at the moment when it comes to deposits.

gordongekko

I always insist on 2 months rent. To evict someone for a breach in the contract takes 6 weeks plus there may be damages to the property. So ya 2 months is normal enough.

djimi

If you are going on how long it takes to evict someone then you may as well ask for 9 months rent as deposit...

2 months is not normal enough.

gaius c

djimi wrote: »

What would be the point of doing this?

Landlords getting greedy and licking their lips now that the rental market has turned firmly in their favour.

irishguy

It's fair enough for landlords, a months rent isn't going to cover much damage. There needs to be a third party involved to protect the tenant though

beauf

Sleepy wrote: »

There was something on Newstalk this morning about such a system being established. Couldn't give it my full attention as I had the kids in the car chatting to me at the time...

While I'd be happy enough to pay 2 months deposit (if I could afford to do so) to an intermediary, there's no way in hell I'd trust a landlord to return 2/3k at the end of the tenancy.

I can see your point, and its a problem where theres no 3rd party independent holder of the deposit. But on the flip side the LL is trusting you with a property, and tenants can cause tens of thousands of pounds of damage.

Agent Smith

My Landlord insistend on slightly over a months rent as a deposit. The idea she said is to stop people using it as the last months rent. I was happy to pay it personally

beauf

gaius c wrote: »

Landlords getting greedy and licking their lips now that the rental market has turned firmly in their favour.

If its so lucrative, have a go. I'd expect many LL wish they could sell up and get out of the business entirely. If it was that profitable, everyone would be getting into the business not out of it. Its the shortage of rental properties that's causing this. Also rents are increasing because costs are increasing.

Doom

There is new legislation been talked about where a 3rd party will retain the deposit, not sure how that'll work, surely they will need to make money...who'll pay?If Its the PRTB God help us all...

3DataModem

djimi wrote: »

Im just curious to know what they think is going to happen in the first 6 months that would warrant needing two months deposit to cover, and why the risk would decrease after 6 months?

There is a small proportion of tenants who just don't pay rent or are habitually late. This'll weed em out I imagine.

gaius c

beauf wrote: »

If its so lucrative, have a go. I'd expect many LL wish they could sell up and get out of the business entirely. If it was that profitable, everyone would be getting into the business not out of it. Its the shortage of rental properties that's causing this. Also rents are increasing because costs are increasing.

That's not why rents are increasing.

Also, folk are piling into BTL's at the moment. Even the shoeboxes in Sandyford are selling and mainly to investors. Look at all the cash sales as older, richer folk look for yields that are not available through savings. I should know because we're taking advantage of the bump in the market to offload ours.

odds_on

djimi wrote: »

Im just curious to know what they think is going to happen in the first 6 months that would warrant needing two months deposit to cover, and why the risk would decrease after 6 months?

I think the risk increases at the end of the tenancy - where the tenant decides to use the deposit as the last month's rent, and if the deposit is only one month, that leaves the landlord with nothing to cover any damages in excess of normal wear and tear.

And with the hassle of going to that snail paced quango called the PRTB, it is often senseless to make a claim, especially if the departing tenant has no other money,

beauf

gaius c wrote: »

That's not why rents are increasing.

Also, folk are piling into BTL's at the moment. Even the shoeboxes in Sandyford are selling and mainly to investors. Look at all the cash sales as older, richer folk look for yields that are not available through savings. I should know because we're taking advantage of the bump in the market to offload ours.

But I didn't say its just because of costs. I also said it was the shortage of rental properties. And hotspots of property price rises are only a tiny part of the story.

Director of the PRTB, Ms. Anne Marie Caulfield, said the findings were “really a story of two markets”. “The rate of increase accelerated in Dublin between Quarter 1 and Quarter 2 of 2013,” she said.

“The rents achieved in this period grew by 3.5pc in Dublin, with rents for apartments rising by 4.5pc and houses by 2pc. This probably reflects the end of the bedsits market, with some landlords of that type of accommodation exiting the rental market.”

“Outside Dublin the rental picture is quite different,” she added.

The costs to upgrade properties to the new standards, a whole range of new taxes. Means a lot of the cheaper places are leaving the market. That's in a market where rents are increasing. Outside of Dublin, there's simply an excess of supply and lower demand.

The baseline for profitability, the costs has been raised. Even if you are not BTL.