Transferring a deposit from estate agent to Open Rent

Landlord Discussion
1

We have a property managed by a local estate agency and are moving it over to Open Rent. The tenant will continue to live in the property. We want to transfer the deposit from the estate agency’s government protection scheme to Open Rent’s. What information does the estate agency need to do this?

2

You can’t do this. You would need to start a fresh and sign a new OR tenancy agreement with the tenant, and this would involve them paying a new holding deposit, then the balance of 1st months rent & security deposit to OR. You could arrange for the agent to refund their deposit to enable them to have the funds to do this.

Its a little complicated, but with good communication with your tenant it can work ok.I did it with one of my long term tenants a few years back.

  1. Create a new tenancy listing:

    • Go to the OpenRent “Rent Now” service to create a new listing for your property.

    • Choose the “OpenRent Only” option to publish your listing for free, which allows your new tenant to apply directly through the service.

  2. Have the new tenant apply:

    • The new tenant should apply for the property through the Rent Now platform.

    • Ensure the new tenant pays a holding deposit.

  3. Generate a new contract:

    • Use the “Rent Now” service to generate a new tenancy agreement with the new tenant’s details.

    • This process will handle the creation of a new contract and ensure it is fully compliant.

  4. Update the deposit protection:
    • OpenRent will collect the new deposit and register it with the relevant scheme
3

Hi @Fergus3

Just to add you do also have to end current tenancy properly including returning deposit in current scheme to tenant. They may well need it before they can pay new deposit which could be an issue.

Also be aware OR deposit scheme is an insurance based option (think they mean the reposit option) which others on these pages have I think described as worse for both tenant and LL, so worth considering if convenience and lower fees of OR vs an agent outweighs that.

OR offer tenants a deposit free option (reposit) but its availability can be turned off by LL, and as well as 1week rent it costs tenant an annual fee after y1

(See Deposit Replacement Schemes: Everything You Need to Know Deposit Replacement Schemes: Everything You Need to Know )

Good luck

4

Karl11, thanks for this. We have listed the property on OR and got the tenant to pay the holding deposit. If it is not possible to get the estate agency to transfer the deposit to OR then I’ll go down the route of getting the deposit back to the tenant and get her to pay the deposit to OR. Thanks for your help.

5

David, thanks for your reply. I’ll have a look at that link and consider best way forward. This is all a bit new to me so appreciate your input.

6

You are going to run into problems with this. Your current agent almost certainly has a clause in the contract you signed imposing a penalty if you try to end the contract but keep the tenant. Have a read of it. They are also very adept at spotting landlords trying to get around it by ending the tenancy and then starting again.

I also don’t see the point. OR are not a managing agent, only a letting agent with a few extras. You presumably already have all the things OR could offer you, like a tenant, a tenancy agreement, the other paperwork required, rent collection etc. If its just about the fees, then I would try to negotiate a reduction and plan how to handle the penalty.

You should also be aware that the Renters Rights Act will be a game changer and unless you have the knowledge required to manage the tenancy in the future, you could fall foul of the hugely increased Council fines the Act will bring in.

7

@David122 good points. Think so long as agents get paid up to end of a sensible period, it’s hard for them to legally stop a LL from rerenting to current tenant as tenancies are between LL and tenant. There will be a notice period for any agreement with agent (otherwise it would be unfair terms and conditions I think) and a process to give agents notice

@Fergus3 although OR offer rent collection, deposit registration, and some emergency cover (‘management plus’ ) you’ll want to think if you will take over any other mgt tasks (regular inspections, fire risk assessments etc) yourself when no longer done by agent or, or will pay for those tasks to be done by others - remembering all these costs are allowable expenses I think.

Also remember all the tasks for a new tenancy like providing copies of e pc, gas and electric safety, “how to rent” etc have to be done for the new tenancy or it won’t be legal -sorry if obvious

8

Sure, but the amount they charge can be pretty substantial, so its important to plan an approach before contacting the existing agent

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9

We have had a meeting with the current estate agency. They have agreed to terminate their management at no cost. We gave them the 3 months notice that was in the contract. We have written to them now asking them to refund the deposit to the tenant to enable her to make the deposit payment to OR.

This property was left to a charity in a will some years ago so I’m acting on behalf of the charity and was advised that OpenRent could be the hassle free option we were after. Many thanks for all the advice above. I’ll discuss that further with head office who are driving this and the person who has recommended OR as he uses them for a couple of properties. Many thanks.

10

Interesting reading and I’m grateful to Karl11 for pointing me here.

I contacted the current managing agents a while back and asked them what they’d charge to exit, and after five years of OK if costly management, they wanted three months’ notice only. The actual terms of the AST were quite ambiguous on this point.

I’ve created an ad on OR on the rent now option and paused it for the present, and have a formal changeover date of a month from now. I’ll post any relevant learnings here.

Adam

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