This was a question put to me recently via twitter:
Deposits, must I take one or can I just let a tenant move in and is it wise to do so?
The short answer is no, you don’t have to take deposits. Indeed, some landlords have made a positive decision not to take a deposit, so as to avoid the bother of having to protect it in a tenancy deposit scheme. For example a landlord who is also a builder once told me that as it was fairly easy for him to do any repair work necessary he didn’t see the point.
However not all landlords are builders. The general view is that taking a deposit from a tenant is a good idea as it gives the tenant an incentive to look after the property.
If a tenant leaves the property in a damaged and messy state, the landlord does have the right to bring a County Court claim for compensation. However he may not have the tenants new address (you need an address for service of court proceedings), and enforcement of CCJs is often tricky. A deposit is there, available at the end of the tenancy, a fund of money for repair work and replacement of broken and missing items.
So my view is that taking a deposit is a good idea. And I would also advise that it be taken before the tenant moves in. Otherwise you may find it difficult to get him to pay it. The time to get a tenant to do things, such as pay the deposit, sign forms etc, is before they move in. Then you can refuse to hand over the keys until he has complied. Afterwards is often too late.
But what do you think? Do you think deposits are unnecessary? Or have you found that tenants look after property better if they have a deposit which is at risk?