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Nicola-mod, Moderator
Category: Law
Satisfied Customers: 21
Experience:  Moderator
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I am running a subletting business of large houses.

Customer Question

Hello, I am running a subletting business of large houses. I give deposit and guarantee rent to the landlords as if I am the tenant. Then I sublet the house per room. I do get HMO licenses etc. My problem is with the deposits I take from the tenants. I know landlords (who own the home) can register the deposit and insure it for a fee and so keep it instead of handing it over to mydeposits, TDS or DPS. As not the owner, it seems that option doesn't work. My problem is that this is a big constraint from a cashflow perspective. What is the smartest thing to do in order not to have this double registering of deposits? I mean, I don't have a problem registering the deposit, but I am looking for the smartest solution from a cashflow perspective. Thank you very much!
Submitted: 2 years ago.
Category: Law
Expert:  Ash replied 2 years ago.
Hello my name is ***** ***** I will help you.
Its bad news I am afraid. There is no way around it. The law says you MUST protect a deposit in an approved scheme. If you dont then you can't take ANY step to evict someone (notice to quit even).
So you can't do anything unless its protected. So sadly you have to go along with it.
I know its a pain and you have cash issues, but sadly the law is the law.
I am sorry if this is not the answer you want and certainly not the one I want to give you, but I have a duty to be honest.
Can I clarify anything for you about this today please?
Customer: replied 2 years ago.
Again, registering the deposit is not the problem. The problem is how to properly register it. What is the appropriate way to register it then? I am not asking if I have to register it - I know I have to. My question is HOW to register it? Please clarify what the right procedure is?
Expert:  Ash replied 2 years ago.
I see. You need to use a Government approved scheme, so like TDS etc.
But it must be an approved scheme.
As far as I am aware, you go onto the website, create an account, pay the deposit, get a certificate to say its paid and that it - your obligations are complete. But you must provide this information to the tenant though.
Does that clarify?
Customer: replied 2 years ago.
Thank you Alex - not exactly. You see, I am not the owner/landlord. If I am the owner/landlord then I have two options "custodial account" i.e. I give the deposit to the approved scheme and they safeguard it, the other option is the "insured deposit" whereby I insure the deposit with the scheme, pay the insurance fee and keep the deposit. I am not sure what my options are given that I am not the owner. Can you please clarify what the right route is if I am not the owner? And please note, I am not the agent either - for the tenants I have sublet to, I am the landlord. I have legal right to sublet - the owner has given it to me.
Expert:  Ash replied 2 years ago.
Ah I see. Sadly I dont know the answer then, it was not clear.
Sadly I will opt out and let one of my colleagues take this over for you.
Customer: replied 2 years ago.
Okay - thank you Alex
Expert:  Nicola-mod replied 2 years ago.
It seems the professional has left this conversation. This happens occasionally, and it's usually because the professional thinks that someone else might be a better match for your question. I've been working hard to find a new professional to assist you with your question, but sometimes finding the right professional can take a little longer than expected.
I wonder whether you're OK with continuing to wait for an answer. If you are, please let me know and I will continue my search. If not, feel free to let me know and I will cancel this question for you.
Thank you!
Customer: replied 2 years ago.
Hello Nicola,
Can you please cancel this question and refund me the amount paid?
Thank you very much!