2 months rent as deposit

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Learner2015

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Hi all,

I have a two bed apartment and the current tenants are moving out next week so I have the joyus task of finding new tenants shortly.

Have had three different tenants in the last few years and tbh never have an issue letting the place - normally let and tenants in within 2 weeks of the advert going up.

My question is re the deposit - I was going to ask for two months rent going forward instead of the usual one (rent will be circa €1,350 a month).

I have never had any major issues but just thought in case my luck does run out it would be better to have a bigger safety net.

What are your thoughts - do any of you do this already? Would love to hear from tenants and landlords alike!
 
I would check out prospective tenants properly, do good background/reference checks including employer and bank references. Also talk to prior landlord and be very clear in your own mind as to why they are moving.

If all that stacks up I don't see the need to get two months rent other than it may be possible simply because of the current rental market. Established rental practice is one months deposit, months rent up front ( there are always some exceptions of course).

In the current environment tenants are very reluctant to move as it is extremely difficult to find a new place, so also ask yourself why tenants are leaving so often, as you indicate that you have had several tenants in a few years. My current experience is that tenants most definitely want to stay on.

As an aside, how come if they are moving out next week you don't have new tenants lined up already? Essential when renting to not have, or minimise, void/empty periods - key to get tenants immediately. I always advertise 1-2 months in advance of tenants leaving so as to have new tenants ready to move in the next day. Surely it is far better to focus on and getting quick tenant turnaround times rather than potentially seeking two months deposit, when in your own words, you've not had major issues.
 
Thanks Gerard for the reply.

I have never shown the apt while current tenants were in situ as I always felt it was a bit of an invasion of their privacy and as I said it has always ceased to be vacant withing 2 weeks which I am willing to accept as a void period.

I do vet my tenants properly (in so far as a non professional can do!) but always think I have been lucky not to get a bad one as vetting can really only do so much hence my thought on trying to get 2 months deposit in case my luck runs out!

Re three tenants in a few years I should point out one was for three years, and the last two for 1 year each of which one was a couple who lost their job and wanted me to accept rent allowance at a lower monthly amount which they would top up - this I declined and my current tenants who are foreign and are moving back home.

Good advice in your reply though which I will remember and thanks for commenting.

Any tenants out there who might advise if this is something that would put them off straight away?
 
"...Any tenants out there who might advise if this is something that would put them off straight away?..."
It would for me.I know nothing about a prospective landlord's finances,but 3k is a huge amount of money to entrust to someone who may have money problems of their own.(I don't mean you specifically!)
 
Thanks vandriver. Good point does pose a risk to the tenant when you look at it that way, never really thought of that!
 
Yep ditto for me. Current rent us 1500 per month. Paying deposit of 1500 plus one month in advance is enough for me. If asked to pay another 1500 quid upfront I'd be walking away. Three grand and lease signature is as far as Im willing to go.
 
I know that one months deposit has been the norm in the past. However I have always thought that a deposit of say €1,000 on a property worth maybe €150,000 is totally inadequate. After all if you hire a car they put a block on your credit card (effectively take a deposit) of more than that.

As far as vetting tenants goes, I have always felt that the ability to provide a deposit tells me more about a prospective tenant than any reference, which is really just a bit of paper.

I take van drivers point 3K is a huge sum of money to entrust to a landlord, but the landlord is entrusting something of much greater value to the tenant.

In many other countries 3 months deposit has always been the norm.
 
At least the house isnt going to disappear into thin air! Plus, there isnt any vetting of landlords or background checks. I think it depends on which side of the "fence" you are on this one. For me, as a renter, any increase in deposit over one month requirement is way OTT.
 
I suppose they way I look at it is the value of the goods I have in it are much more than one months rent so deposit should be more.

Username123 I think landlord vetting should be the norm. I'm not saying I'm perfect by any stretch but some of the story's I've heard over the years about the carrying on of landlords is shocking.
 
It's a sellers market at the moment. I'd strongly consider looking for three or four months rent as a deposit. Good way to eliminate the messers.
 
Gordon Gekko said:
It's a sellers market at the moment. I'd strongly consider looking for three or four months rent as a deposit. Good way to eliminate the messers.
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And the "non messers". Who do you think has spare 7k lying around to give to landlord in blind faith?!
 
username123 said:
And the "non messers". Who do you think has spare 7k lying around to give to landlord in blind faith?!
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If everyone had to pay a 7K deposit to put a roof over their heads, I'd say there would be a fair number of homeless people around :confused:
 
The last time I put a place up for rent, 30 people wanted it. I had people trying to offer more money. One of my colleagues got a deposit of two months recently. The thing is username123, there are people with that sort of cash hanging around.
 
While that may be true, I don't think they should have spend that amount of money to get a roof over their heads.
Landlords are in the market to make a profit at the end of the day. Hence, the theory of risk v rewards dictates they must take on some risk to make that profit. Allied with this, they also have home insurance and landlord insurance, so pushing an even larger deposit onto already inflated in rents purely to offset risk of "bad" tenants is very unfair. As usual, one bad egg and the rest of us renters suffer.

Put another way, if I was to pay 7K deposit instead of 1.5K, what do I get in return for this extra 5.5K?

Its certainly not a useful way to use the 7K in my opinion, at that point you're heading towards a real house deposit. However, I suppose that's a different question.
 
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Well thanks everyone for their thoughts. I am going to test the water and try for two months deposit. As username said (although to be fair didn't mean it this way)for a landlord it is about balancing risk and profit. Well if I can reduce my risk and maintain the same level of profit I think it's something I should do or at least try to.

Gordon when I rented it 12 months ago I also had at least three people offering me more than I advertised it for. Put me off them really cause I didn't like the urgency they were putting me under to accept them. Went with my gut and have been very happy with them - wish they were staying!
 
cremeegg said:
As far as vetting tenants goes, I have always felt that the ability to provide a deposit tells me more about a prospective tenant than any reference, which is really just a bit of paper.
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Couldn't disagree more with that comment. Vetting is the number one thing any landlord should be doing. Vetting is not simply about getting a piece of paper. That is only the start. For example, reference from employer - call and speak with the person who gave it. If you are not allowed to call or anything sounds untoward then that should tell you enough. Google the employer and employee.

Bank reference - call the bank and confirm that the reference was given. Previous landlord (I am very cautious with these, got burned once) though in conjunction with other references useful but only if you talk to the landlord. Ask the landlord a few questions about the tenant, if they know the answers then decide how much reliance can you place on the landlord reference. Make one or two of the questions very relevant and of the type that only a landlord is likely to know (e.g. when does the tenant pay the rent and how, is the house oil or gas, how was the deposit paid, cheque or cash, why are they leaving). These type of questions tend to identify if a friends name was given and used on the piece of paper and not the landlords). If the person/landlord is sounding anyway hesitant or reluctant to answer simple questions, make your own conclusion.

A good deposit is vital also of course, however I have had people arriving with cash, one offered three months rent in advance. That level of desperation was enough to send a massive warning sign. When I checked the reference it didn't stack up. Another potential tenant offered reference names aplenty on a Friday evening, then the following morning, a Saturday morning, called with a sob story that they needed to move over the weekend. Just the very time when I was unable to make calls to check out the references. I had actually got a deposit on the Friday evening as they appeared ok. On Saturday I offered the deposit back there and then, which unsurprisingly resulted in them backtracking saying they could hold on until the following week after all. When I checked the references they were not sufficient and I returned the deposit.

References are only useful if properly followed up. If only seen as a piece of paper then yes I agree, they are useless.

As an aside, I don't think landlords (and speaking as one) should be taking advantage of the current rental squeeze to get substantially increased deposits. Do the reference checks, rely on the tried and trusted one months deposit and rent in advance also, maintain a professional and courteous relationship with tenants. In my experience far more likely to get a better end result. Also less difficulties at the end of a tenancy when a tenant may start playing games (eg delaying rent) for fear of a landlord not returning several months deposits.

And remember landlords were probably tenants themselves at one stage, many still are.
 
Gerard123 said:
References are only useful if properly followed up. If only seen as a piece of paper then yes I agree, they are useless.
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From your post you obviously take good care to follow up thoroughly on references. Where does this leave the tenant who is unemployed or does not have a bank account.

Gerard123 said:
As an aside, I don't think landlords (and speaking as one) should be taking advantage of the current rental squeeze to get substantially increased deposits.
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I agree, but I would see a move from a one month to a two month or yes even three month deposit as correcting an existing problem rather than taking advantage. The traditional one month deposit is disproportionately low.

username123 said:
At least the house isnt going to disappear into thin air!
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No it isn't but tenants have progressively got stronger legal rights versus landlords. Nowadays a tenant can simply stop paying rent and refuse to move out. It would take the landlord significantly more than 3 months to get an evection order.
 
cremeegg said:
From your post you obviously take good care to follow up thoroughly on references. Where does this leave the tenant who is unemployed or does not have a bank account..
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Try my best but it has come from experience and seeing what works rather than any deep seated or theoretical desire. I have got burned once so swore it would not happen again, I would rather leave a place idle for a few extra weeks rather than run a risk, to allow time to properly check references. I don't see any distinction between someone employed and someone on social, I have had good and bad of each. Really comes down to the person themselves, can they afford the house, etc.

Ultimately it is up to prospective tenant to offer up and provide references, you can ask them what they can provide and offer suggestions. If unemployed did they previously work, where, can a reference be got from there, were they given a reference letter, etc.

Other suggestions, parents, can they give a guarantee or can they lend support or evidence with the reference. I recall I rented a house to a person on social with a young child on the basis of her mother accompanying her to the viewing, mother said she would get a reference for herself, which I agreed would help. She was living in a small house with her parents, she provided proof of living there, I took a drive by of parents house.

Have they rented previously, can they show you the lease as proof, can they show you the social welfare slips provided to tenants monthly, how long have they rented there? Are they moving every year, or have they rented the one house for a few years (easy to prove, some official letters with dates, gas or electricity account details?)

If someone is unemployed, does not have a bank account and cannot offer up any decent references how is one supposed to figure out whether they are an acceptable tenant or not? No right and wrong answer here, but thoroughly checking out references is far more likely to lead to a better outcome more of the time than not.

cremeegg said:
No it isn't but tenants have progressively got stronger legal rights versus landlords. Nowadays a tenant can simply stop paying rent and refuse to move out. It would take the landlord significantly more than 3 months to get an evection order.
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100% agree, far too much weighted in favour of tenants. Should be more balanced. There are plenty of good landlords, but the media seem to only focus on the tiny proportion where there are horror stories. Vast majority of tenants are super also. It is the approach to dealing with the few bad ones (landlords and tenants) that tend to drive public policy rather than a more balanced debate and policy.
 
There would seem to be merit in making it at least two months rent for the deposit...very little downside for the landlord.
 
As a current renter, this would be extremely off-putting; there's just too much that can go wrong. The landlord could decide to mess around at move out time (no-one really wants to go to the prtb). They could also, of course, be in dire financial straits and unable to pay back the money at the end; we have no deposit protection here and a lot of mortgages are in deep arrears. Are you intending to show prospective tenants proof of your solvency?

It's also unusual enough that people may be quite suspicious of it; to be honest, when I first heard of the odd landlord asking for two months deposit, I just assumed it was a scam of some sort. It isn't standard practice in this country.

There are only two scenarios where I'd consider it. One would be where the rent is below market rate. If market rate is 1500, and I'm getting it for 1400, sure, why not give a larger deposit. The other is if I could not get anywhere else.

Now, ask yourself, do you really want to be renting at below market rate, or renting to people who for whatever reason can't rent elsewhere?
 
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