Instead of paying a standard deposit, my tenant wants to use a bond scheme. What is this, and should I accept?
Bond schemes are there to help people rent a house when they cannot get a deposit together. It provides assistance to people who cannot afford a cash deposit, as landlords are instead offered a bond by the local council replacing the traditional cash deposit.
Different bond schemes have different rules. The majority of these schemes work by providing a guarantee to the landlord. No money actually changes hands.
There may be a limit on how big a deposit they can help with. Some are aimed at certain groups of people (such as young people, elderly or people on benefits).
Some schemes may only use landlords who have properties available and are registered with that council.
The bond is an agreement with the council. At the start of the tenancy, you and the tenant must sign up to the conditions of the bond agreement with the council. This agreement explains when a claim can be made and what for, should the tenant break the tenancy agreement.
If there are difficulties at the end of your tenancy, you can ask the scheme-provider to pay for damage the tenant has caused or rent not paid (often up to a maximum of one month's rent). The bond scheme provider will you and then ask the tenant to repay the money to the Scheme. Only in this scenario does money change hands.
You are not legally obliged to take a guarantee, and whether you do depends on your personal circumstances.
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