The owner of the company KIS Lettings, Ajay Jagota, has argued that asking tenants for a deposit before moving into their property is outdated and should be scrapped by landlords. Jagota has already adapted this technique and has found that it has proved beneficial for both himself and his tenants.
Jagota claims that deposits are a relic from a bygone age and that asking a tenant for a deposit on a property can create an uneasy relationship from early on. “Landlord-tenant relationships are ideally long-term partnerships based on trust”, said Jagota, “turning to someone you’ve just met and asking them for money because you don’t believe they won’t damage your property or break their contract is hardly the best start to a trusting partnership”. He goes on to argue that during this financial climate it is unrealistic to expect potential tenants to have money ready to pay for a deposit, and by only accepting tenants who have a certain amount of money spare landlords are limiting themselves to the amount of clients they can cater to.
Instead of asking for a deposit, Jagota argues that it is more beneficial to ask tenants for a guarantor such as “a home-owning friend or family member, to sign a legally binding document, stating that, should the tenant fall into rent arrears or cause damage, they are jointly liable”. He argues that tenants are less likely to let down their family or friends than their landlords. Furthermore, thanks to landlord insurance, if a tenant fails to pay the rent Jagota avoids lengthy court processes to enforce the guarantees as his insurance policy includes nil-excess rent guarantee and full legal protection cover. Jagota goes on to explain that “this means landlords get their money immediately and the insurance company has someone else to pursue besides the tenant, offering them a less risky proposition”.