Bond - For Landlords

Deposit Guarantee FAQS

Over the past ten years we have worked with landlords who have accepted a deposit guarantee (Deposit Bond). From that accumulated experience, we have developed a series of questions most likely to be asked of Path by a landlord thinking about using this scheme. We hope this will be of use for any new or existing landlords.

1. Do you pay a cash deposit?

No. Path can provide a deposit guarantee (bond) on behalf of a tenant who meets our criteria and does not have the means to provide a deposit themselves. This guarantee is a signed agreement, which outlines the terms and conditions under which will agree to guarantee the deposit.

2. How much money will the bond cover?

The bond will cover up to four weeks rent (as determined by the rent office). The reason for this is to help encourage rents in line with what housing benefit will pay and therefore which are affordable.

3. Under what circumstances will the Bond be paid out?

A Bond can be claimed against when the tenant leaves and either:

Has caused damage to the property or loss through missing items on an inventory
Left owing rent arrears

The maximum rent arrears we will take into account is the rent as determined by the rent office, so if there was a top-up to pay, this will be the sole responsibility of the tenant and not covered by the Bond. Path will only consider paying claims up to the agreed value of the Bond. In the case of damage we would need to be allowed access to complete a damage report prior to any payments being considered.

4. Will you guarantee the rent?

Unfortunately we cannot guarantee any rental payments. It will remain the responsibility of the tenant to pay their rent, either from their own income or with help from housing benefit.

5. How long does a bond last

The maximum time it will last is two years. The bond will last up to 12 months at its original value, and for a further 12 months at half of its original value. The bond can end earlier than this if the tenant has put in place their own deposit, or if the landlord is happy to continue the tenancy without a deposit in place.

6. Why does a bond halve in value after 12 months?

The purpose of the bond is to give a landlord the security to accommodate a tenant who does not have the finances to pay a full deposit in advance. The aim is to give the tenant time to save and pay their deposit, and we feel 12 months is ample time to save half of the final amount.

7. What should I do if the tenant does not save the deposit?

At the start of every tenancy and at each review stage (every six months) we remind the client of their responsibility to save for their deposit. If your tenant has made no contribution towards their deposit, and you do not feel comfortable in having a tenant not protected by a deposit, we can offer to cover a period of notice. In most cases we would hope that this would be a caution to the tenant that they need to start putting their own deposit in place or risk losing their tenancy.

In order to help in saving deposits, the Rent Deposit Team can provide payment schedules for you as a tool to help encourage the client to save their deposit as an amount on top of their rent each week/month.

8. Will Path collect & hold the deposit?

No. We advise the client to either save and then pay you the full deposit, or pay an extra amount on top of their rent until a deposit has been paid in full. Path does not have the facilities to collect money from clients.

We will be reviewing the length of the bond and deposit savings in line with the introduction of tenancy deposit schemes due to come into use in April 2007. We may adapt our services to make allowances for the new way in which deposits will need to be held.

9. How can the bond benefit me as a landlord?

If you are a landlord who houses/would consider housing tenants in receipt of housing benefit, you will understand that, for tenants on low income, getting together the kind of money to secure a tenancy can be a difficult task. You may be keen to take on a tenant but are wary about doing so without some back up if problems arise. Path will not only provide a guarantee to cover any losses you might face (up to the agreed value of the bond), but can also offer advice and assistance at the onset of any problems. We can contact housing benefit, visit the client, create payment schedules for arrears, offer any assistance we can to make the tenancy a success. We can make no guarantees but aim to be supportive and responsive.

10. What happens at end of two years?

At the end of the bond, either when the client has saved their own deposit or it reaches the end of its life span, the tenant should have paid their deposit. At this point we will close the file we have for the client. However, if you have any concerns after this time we will be happy to signpost/offer advice.

11. Will Path manage the property?

Path cannot manage properties for you. You will still be responsible for collecting rent, carrying out repairs, providing a tenancy agreements and carrying out gas and electric safety checks and other responsibilities you must perform as a landlord.

12. Who is responsible for filling in the HB forms?

The tenant is ultimately responsible for paying their rent, whether from wages or housing benefit. Path can help complete HB forms with tenants, ensure that Landlord Direct forms are completed and submitted, and monitor HB with the client’s permission. If you have any queries or concerns then we can try and help resolve them.