Security deposit

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HoneypotCottages
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Location: Chipping Campden, Cotswolds

Post by HoneypotCottages »

Thanks for the heads up Kev...I'll take a look! Andy
Andy Smith
OrangeBlossom
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Joined: Tue Dec 30, 2014 12:03 am
Location: Tavira, Algarve, Portugal

Deposits and refunding them

Post by OrangeBlossom »

kevsboredagain wrote:
HoneypotCottages wrote: International bank transfer refunds are expensive and so we suggest guests avoid this.
I'm now recommending Transferwise to guests as cheap alternative to Paypal or international bank transfer. Many have tried it and been pleased.
I've rather belatedly just read through this very interesting thread. I've been renting in the Algarve for under a year and the one time I was facing high bank charges to refund my security deposit to Australia, I did suggest to the client that we use Transferwise, which we duly did but it hadn't occurred to me to use it in all cases. It would certainly be easier to have a single method, but you still have the hassle of collecting the bank account details with TransferWise, don't you? Can one raise an invoice on Transferwise to take the deposit and do an automatic refund, the way people have mentioned they do with PayPal? I suspect not.

Even if you could, I don't think it would be possible to transfer to both UK and international clients from the same bank account. A currency transfer has to be involved, doesn't it?

By the way, within the EU it shouldn't cost too much to do a cross-border bank transfer as long as you do it using SEPA. UK banks aren't very good at advertising that this exists and often try to get £30 out of you for CHAPS or whatever but when I asked how much SEPA cost last year I was quoted £6 and my Portuguese bank quoted a similar figure, €8 if I remember correctly. Of course that's alot more than the 30p max that it would seem to cost using PayPal. I wonder though whether for PayPal, the same issues arise that were talked about in another thread (on Credit Card payments) . A problem arose for people wanting to link a bank account to a PayPal account in a country which was not the one they resided in. Does the fee free refund option on Paypal only apply if you are refunding to the same currency as the one linked to your PayPal account? If so, I'd need to open two PayPal accts a sterling and a euro one, (assuming I could get around the residency issue) if I wanted to do all my security deposits and refunds in a single manner.

Not to detract totally from the original topic of the thread, my experience is not lengthy enough for me to have a very firm idea on whether asking for a security deposit deters customers but I have had a couple of suggestions that it might and that timing might be critical.

Initially, not to deter customers (until I had some reviews) I decided to accept Online booking by credit card with OD but to encourage payment by bank transfer I had a differential between the time when the security deposit was due, with the final payment (8 weeks before arrival) in the case of CC payment and a week before arrival in the latter. I've since changed this to a week before arrival in all cases as one booking that I'd spent quite alot of time and email traffic on didn't come to fruition in the end and the reason given at the last minute was that 8 weeks was a long time to have the deposit 'tied up'.

I was told horror stories of things that customers do to rental properties in the Algarve before I opened for business and was advised by some people with experience that it would be crazy not to have a fairly substantial security deposit. My refundable security deposit is €300 for an apartment that sleeps 6 and I raise this to €350 if they want to use the garage. The reasoning is that I'm not charging any extra rental for the garage and the cost of the remote for the garage doors would be €50 to replace if lost. On one occasion I was asked if the clients could use the garage and when I explained about the extra deposit they said they'd do without the garage, so I guess the amount does make a difference to (some) people.

Despite what people on this thread have said about rarely needing to retain any money from deposits, I plan to continue charging one, as I'm pretty convinced by the argument that people will take more care if they've paid one. I might consider reducing the amount though; I'm still thinking about that, after reading all the posts.
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kevsboredagain
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Re: Deposits and refunding them

Post by kevsboredagain »

OrangeBlossom wrote:
kevsboredagain wrote:
HoneypotCottages wrote: International bank transfer refunds are expensive and so we suggest guests avoid this.
I'm now recommending Transferwise to guests as cheap alternative to Paypal or international bank transfer. Many have tried it and been pleased.
it hadn't occurred to me to use it in all cases. It would certainly be easier to have a single method, but you still have the hassle of collecting the bank account details with TransferWise, don't you? Can one raise an invoice on Transferwise to take the deposit and do an automatic refund, the way people have mentioned they do with PayPal? I suspect not.
A currency transfer service is just that. It transfers from one currency to another, usually cheaper than a bank. It's not a payment gateway so I'm not sure why you ask if it can do all those things. You can pay the transfer by credit card but it still goes into a receiving bank account.

Obviously for an owner, it would be easier to have one single payment system. This however would then limit the choice to your client. Perhaps your client does not want to use Paypal/Stripe or other payment gateway and pay by credit card. Many people in my country don't even have a credit card and bank transfer is considered a fairly normal way of paying for online goods, without incurring fees. I see nothing wrong in offering as many ways to pay as possible. Choice is good for the client.

SEPA transfers should be almost free as they cost almost nothing for the bank. However, as you say, banks still often charge, even within the EU. I can transfer to France or Spain from Switzerland and it costs me nothing but if I do the same to my pool man, he gets charged and bills me for the charges. My UK bank also charges a hefty fee to transfer to the EU, so I use Transferwise for that.
Bunny
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Joined: Wed Oct 16, 2013 8:48 pm
Location: South of England

Post by Bunny »

kevsboredagain wrote:I think the subject of a deposit or not can also depend whether or not you are on site and do the change overs yourself. If the guests know that the owner will be seeing the property after they leave, there is surely far less chance of unannounced damage.
In my experience, it appears not to be the case. I live on site and do the changeovers, but about 90% of my damage goes unreported. I've just discovered that a kid has drawn in pen all over an oak door frame. Because of the grain you don't really notice it until you spot it, but once seen it is glaring if you know what I mean. Trouble is that I've had young children in for the past two lets and I cannot 100% say that I didn't miss it at changeover between the two. So, they've both got away with it. In any case, the last let was with ABNB and it's now more than 24 hours since they left, so I can't claim against the deposit anyway. So, it's worth remembering that if you only list on commission sites, some only give you 24 hours to retain a deposit. So, you may just as well not take one as I've often only discovered damage too late.
OrangeBlossom
Posts: 44
Joined: Tue Dec 30, 2014 12:03 am
Location: Tavira, Algarve, Portugal

Re: Deposits and refunding them

Post by OrangeBlossom »

kevsboredagain wrote: Obviously for an owner, it would be easier to have one single payment system. This however would then limit the choice to your client. Perhaps your client does not want to use Paypal/Stripe or other payment gateway and pay by credit card. Many people in my country don't even have a credit card and bank transfer is considered a fairly normal way of paying for online goods, without incurring fees. I see nothing wrong in offering as many ways to pay as possible. Choice is good for the client.
Sorry for being misleading kevsboredagain, I didn't say exactly what I meant to say. I agree totally that we should give clients a choice of payment methods. When I talked about a single system I meant to say that it would be great to have a single repayment system.
G.H
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Joined: Tue Jun 14, 2016 1:20 pm

Post by G.H »

From the other side...we were charged £9 for a broken mug in a holiday cottage a couple of years ago! Really thought a mug would've been wear and tear but maybe not at that price bracket. Pretty sure we'll be putting ikea 50p mugs in so no-one staying at ours will be charged!
Gina
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