RLA News Service

We recommend that you consider alternatives to take a deposit (or bond) from your tenants. There are two alternatives one an administration charge – this is non refundable and is a charge made e.g. for taking up references and preparing and completing tenancy agreements or taking rent in advance.

This means that you take two instalments of rent in advance at the beginning of a tenancy rather than the usual one, but no deposit is taken.

There is nothing to stop you both collecting an administration charge and taking two payments of rent in advance at the beginning of the tenancy.

However, it is very important that you make it very clear to the tenant/s what you are doing. You must NOT call either of these payments a deposit or bond. They must be described as what they are (i.e. an administration charge or rent in advance).

If you do take a deposit (or bond) then you must deal with it under one of the statutory tenancy protection schemes. If it is a deposit or bond then failure to comply with the scheme could mean that you would have to pay a penalty of three times the deposit. Government advice and Court decisions are that if a payment is correctly described and is an administration charge or rent in advance it is not caught by the Tenancy Deposit Protection Schemes.

There have been cases where landlords have been held to have wrongly described the payments so they have misrepresented the position. Where this happens a payment could well be treated as a tenancy deposit so if the landlord has failed to protect it under one of the Tenancy Deposit Protection Schemes he/she will have to pay the three times penalty.

To help you the RLA has prepared two simple leaflets to give to your tenants to explain to them. It is most important that you do not use the words “deposit” or “bond” when taking an administration charge or rent in advance. The RLA tenancy agreement also makes the position clear.

To download the leaflet “Two Months Rent In Advance”, please click here

To download the leaflet “Tenancy Administration Charge”, please click here