Q. I have just re-located back here from New York and my company, one of the larger banks in canary wharf have agreed to rent a flat for me as part of my re-location package. However, a number of agents have refused my offers due to the fact that my company offers a letter of guarantee as the deposit. Surely this is not right, I have rented for years and this has always been acceptable in the past?
A. Prior to the events of the last couple of weeks where we saw companies like Lehman’s go bust, it has been common practice with many company lets to offer a letter of guarantee as the deposit and this has always been acceptable in the past when backed up by large companies and banks. This week however estate agents were cautioned to take great care by the NAEA (National association of Estate Agents) in accepting these letters of deposit in the current market, as these letters are unlikely to be sufficient to cover our Landlord clients in the event of a collapse. Indeed many have already suffered severe losses with both the Lehman and Bradford & Bingley drama. Please remember these are unsecured creditors where there could be a distinct possibility of the landlord losing both the tenant and being exposed to dilapidation’s with little chance of recovery.