Can I increase the deposit when reviewing the rent in AST?

Hello,

We are private landlords. We have tenants occupied already. We are going for another fixed 12 month period AST. Tenants are happy with the rent review based on RPI calculation & market price as well.

Now that the deposit is not sufficient enough for the 5-week rule based on the recent tenancy law (deposit cap), can we ask for more deposit and re-register the deposit and provide it to the tenant?

Eg: A deposit of £2250 was paid 3 years back during the initial move-in time when the rent was £1500. Later we refunded £403.84 when the tenancy law came into effect. so the deposit is only £1846 with DPS. But now the rent is increased now to £1800. The deposit with DPS is not sufficient to cover the 5 week period. So can we ask the tenants to pay the extra £230 or not? Is it legal to ask the tenants to pay the extra £230 into the DPS account? Please clarify

Please share your thoughts.

Thanks,
M

If you want to increase the deposit it will need to be a new contract. Rent increases on the old contract are fine as long as both side accept the contract doesn’t need to be changed. Is it worth the hassle of a new contract? Would the tenant agree to a new contract? They are already agreed to a rent increase within one year - that’s fair of them.

1 Like

If they are good tenants why ask for increased deposit ?

1 Like

The tenants are there for a couple of years now. we renew the AST agreement every 12 months. We don’t increase the rent within 1 year and all. It is only reviewed annually. So far whatever the deposit amount was sufficient enough to meet the 5 weeks cap. Now we have this situation is that it is not 5 weeks cap and hence we are thinking of requesting them to top it up while we are renewing the AST agreement. Hence I would like to know if it is legal or not to ask for the increase (i.el top-up) in the protected scheme. Hope my message is clear and please share your thoughts.

They are good tenants. We would like to ask for increase only just to cover the 5-week cap and make sure the deposit is more than the rental value for safety and security reasons

You would need to repay existing deposit and take a new deposit based on higher amount. It really isnt worth it and most tenants would not be happy with it, particularly as they have been good tenants. You seem to have increased rent by 20% in 3 years so just be happy with that…

Why do you issue a new tenancy every year? Better for you to keep it periodic. No admin, (which its easy to get wrong), no costs and the ability to serve notice if things should suddenly change.

We aren’t aware of the advantages of keeping it periodic especially when there is a change in the rent. Hence we renewed the agreement with the changes (like dates of the agreement period, rental value etc.,). But by any chance, could you please share your thoughts on whether increasing the deposit is legal or not when the amount is just 5 weeks of the rental value only. Kindly let me know.

Yes, if we ask them to top-up the deposit, we will repay the existing and take a new one only. We will register it promptly as well. I understand your point about the value of the tenants etc.,

We just wanted to increase the deposit only to cover the 5-week cap value and not for our individual accounts.

I kindly ask for thoughts from all landlords whether is anyone did such an increase in the past? If so, is it legal or not. Also if not, then how are you all managing when the deposit is way lower than the 5 week period and how would you all cover the loss in the future if some unfortunate scenarios come across. I just need clarifications only.

Thanks

You don’t need a new tenancy agreement to increase the rent. It can either be done by mutual agreement or through a section 13 notice to the tenant. “Renewing” tenancy agreements is an invention of the agencies to charge extra fees.

You can increase the deposit if you wish, but there is no need to and the vast majority of landlords don’t bother. Given the dangers of making a costly mistake with a deposit, I would suggest its better to leave it as it is.

I’ve never increased deposits. It is just one of the risks of being a landlord, although the amount you are likely to be able to claim from the deposit is likely to reduce over time during the tenancy, as you need to allow for normal wear and tear on walls, carpets etc so a deposit below 5 weeks is acceptable where you know they are reliable.

Tenants are still liable for damage or unpaid rent if it isn’t covered by deposit so you can still reclaim your losses, assuming they have the money.

Yes you can increase the deposit with a new contract. Your tenant may or may not pay it. It’s your call. As the post above reads the longer they are there the more that can be chalked up to “wear and tear.” Whatever gives you peace of mind.

Thanks @David122 , @Richard19 for your time and kind reply and we will take these into account and do the right decision.

Thanks @Andrew44 for your time and kind reply and we will take these into account and do the right decision.

Hello everyone,

I got a query. Has anyone protected the deposit through DPS? If so, the DPS is holding the old data (i.e. the tenancy start date, rental value etc., with the information when the tenancy initially started) In our case, we are having same tenant for few years now. So the tenancy start date, rental value is all old ones. How do you all keep those information up-to date?

When we called DPS, they told us that they cannot update any existing info and we need re-register the deposit for any material changes (i.e rental value, tenancy starte date) to be reflected up-to date?

So, to simplify my query, as landlords how do you make sure that DPS is holding and showing the correct information (your rental value, tenancy start date etc.,)?

Please share your valuable thoughts.

Thanks

Why do you think you need to update it? If youve issued a replacement tenancy then provided nothing changed, there is no need to re-protect a custodial deposit, although you would have to for an insured deposit.

Hi @David122,

I agree with what you say. But it is not clearly mentioned anywhere in DPS as there is no need to re-register for custodial deposit in DPS. It is clearly mentioned in TDS.

When we called DPS for clarification and asked the rental value is changed and the tenancy start and end dates are old, then they told us that they can’t change any details after the initial submission. If we wanted to keep it up-to-date, then we have only the option of re-register.

Hence asking all landlords who have the deposit protected through DPS, whether we need to re-rgeister every time we renew the AST annually, or can we just leave it as it is and provide the prescribed info alone? Is it just enough or not? Please share your thoughts.

Thanks

You don’t need to keep it “up to date”. In fact if you could somehow alter the dates, you could create a problem for yourself as its important that the deposit is continuously protected from within 30 days of receipt.

1 Like

Unless the tenants request a “renewal” specifically, I think most landlords go for a periodic tenancy as there doesn’t seem to be a significant benefit to going through the additional work for this? Re your question, my understanding is that landlords are required to re-register the deposit as the renewed tenancy agreement is essentially treated as a new tenancy; this is what I had to do when there was a change of name for 1 out of the 4 tenants in a property, even though no other details had changed.

As for the increase in deposit, the 5 week rental value is only a cap/maximum so it is neither mandatory to keep this at the maximum level nor required to be kept up to date in line with the increase in rent, unless you have serious concerns about the tenants. It is already rather difficult to claim any of the deposit unless you have a watertight case to present to TDS, so an increase in the deposit, particularly for the sake of £230, is a bit of a moot point in my opinion.

All the best,
Mita

Thanks @Mita for sharing your thoughts