Ask three months rolling rent in advance?

Ask three months rolling rent in advance?

9:16 AM, 27th November 2020, About 6 months ago 8

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After the tenant fee ban, can landlords now ask for three months rolling rent in advance rather than normal one month in advance?

This is not the case where the tenant pays rent every 3 months, but is that the tenant pays three months rent at the start of the tenancy and then keeps paying monthly rent for each month going forward.

Many thanks

Mike

Editor’s Note:

The only payments you can charge in connection with a tenancy are:

  • The rent
  • A refundable tenancy deposit capped at no more than five weeks’ rent where the annual rent is less than £50,000, or six weeks’ rent where the total annual rent is £50,000 or above
  • A refundable holding deposit (to reserve a property) capped at no more than one week’s rent
  • Payments to change the tenancy when requested by the tenant, capped at £50, or reasonable costs incurred if higher
  • Payments associated with early termination of the tenancy, when requested by the tenant
  • Payments in respect of utilities, communication services, TV licence and council tax; and
  • A default fee for late payment of rent and replacement of a lost key/security device, where required under a tenancy agreement

The rent: You should agree the amount of rent to be paid with the tenant when agreeing to let the property. The rent should be paid at regular, specified intervals. The amount charged will usually be equally split across the tenancy. In the first year of the tenancy, you must not charge more at the start of the tenancy compared to a later period.

For example, you cannot require a tenant to pay £800 in month one and £500 in month two onwards – the additional excess of £300 in month one will be a prohibited payment. But, if appropriate, you may decrease the rent (without penalty) during the first year if agreed by the tenant once the tenancy has started or under a rent review clause that enables both rent increases and decreases.



Comments

by Neil Patterson

9:18 AM, 27th November 2020, About 6 months ago

Hi Mike,

Please see the government notes above and why this would be a prohibited payment.

by Tony Hodge

10:38 AM, 27th November 2020, About 6 months ago

I can't see many tenants willing to fork out 3 months rent in advance and it will limit your market.

by Mike

13:41 PM, 27th November 2020, About 6 months ago

Thanks for your comments! After posting the question, I have come across an article from Shelter (updated 2019 Nov) to indicate this seems fine to do.

It is not an attempt to increase or change rent during the tenancy, nor to ask for more deposit, but as an advanced payment for rent for final months of the tenancy.

Please let me know if you see differently.
Thanks

https://england.shelter.org.uk/housing_advice/private_renting/rent_in_advance

by TheBiggerPicture

15:36 PM, 27th November 2020, About 6 months ago

Reply to the comment left by Mike at 27/11/2020 - 13:41
Interesting, you can ask Tennant's to pay final months rent up front.
Stops tenants just not paying final month.(although not the second to last month).

Also stops the cheeky ones that just want to pay one month when moving in and then stop paying anything. They will go elsewhere.

by David

17:50 PM, 28th November 2020, About 6 months ago

I think that this would be regarded as a security deposit under the Housing Act 2004 deposit legislation because I believe that rent is only rent if its for a known period and taking 3 months rent in advance for unspecified rental periods means it isn't rent but a security deposit. The landlord would be liable to a penalty if this wasn't protected. It would also breach the Tenant Fees Act because its more than 5 weeks rent.

by Ian Simpson

7:40 AM, 29th November 2020, About 6 months ago

I have just had one tenant voluntarily offer three months in advance + Deposit, so we will protect the deposit and put the three months payment to, er, rent for three months...! Not exactly rocket science.. and cannot see why this would be "prohibited"...??!

The other strategy we are considering currently is serving a Section21 at the start of a six months tenancy, because you have to give six months notice now. If the tenant behaves, and keeps paying... we shred it. If they turn bad and stop paying/cause trouble, the papers are in by the end of the six months, all ready to go!!

I suspect someone on here will say this is "prohibited" as well!!

by The Forever Tenant

12:27 PM, 29th November 2020, About 6 months ago

Reply to the comment left by Ian Simpson at 29/11/2020 - 07:40
From what I understand, the answer to your questions are Yes.

Complications can arise if the money you take in advance is not specified as to what it covers. You can say "the last 2 months of the tenancy" but as that is not defined as an actual date or part of the tenancy, then it would be effectively taken as a deposit.

I believe that you can state in the tenancy agreement that the amount paid covers months 1, 5 and 6 of the tenancy, but you could not remain 3 months in advance forever.

In relation to the Section 21 notice, you cant issue a notice until 4 months into the tenancy, so one issued at the start of the tenancy is invalid.

by David

14:13 PM, 29th November 2020, About 6 months ago

Yes, as above, by all means take 3 months rent in advance if you intend it to cover months 1, 2 and 3, (in which case you take no further payment until month 4), or for it to cover months 1, 11 and 12, but then it must be used for those months. Otherwise its an illegal security deposit.


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