Can I request advance rental payments from parents acting as Guarantor?

by Readers Question

10:49 AM, 20th May 2015
About 4 years ago

Can I request advance rental payments from parents acting as Guarantor?

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Can I request advance rental payments from parents acting as Guarantor?

I have 2 HMOs that I rent out to ‘professional Tenants’ I took one tenant who is on a very low income but had her rent paid 5 months in advance by her parents who have moved overseas.

Her fixed term ends in June and I have requested on-going 2 months rent in advance since their daughter is still on a low income.

They state that I can only ask for one month? I plan to amend the AST and gain signatures stating rent to be paid 2 months in advance post fixed term, but do not think I am being unreasonable requesting advance payments for a young tenant alone in the UK with very little income as she is doing an apprenticeship so almost half student/half professional.

Any advice please?

Dinahcheque



Comments

Mark Alexander

9:29 AM, 21st May 2015
About 4 years ago

Hi Dinah

Be very careful about the distinction between advance rent and deposits which must be protected.

The case law for this is Johnson vs Old, see >>> http://www.property118.com/court-of-appeal-decision-made-on-when-is-a-payment-rent-and-when-is-it-a-deposit/

From what you have said, I think it would be deemed that the additional payment is in fact a deposit, especially if rent continues to be paid monbthly. If that is the case, what you are deeming to be advance rent would have to be protected as a deposit, otherwise the consequences for you could be very serious.
.

Dinah Pickering

10:14 AM, 21st May 2015
About 4 years ago

Reply to the comment left by "Mark Alexander" at "21/05/2015 - 09:29":

Hi Mark,

Thank-you for your valuable advice. Since my post I have yesterday issued a Section 21 (my first) used a NLA form and yes I have protected the original deposit and issued all the correct prescribed information when the tenancy was signed. I agree with you to ask of two months rent to be paid in advance rather than the pcm stated on the AST this is deemed a deposit and if the parents had agreed I would of protected this too. Basically the notice has been given as the parents have said out of principle and their high earnings in Dubai why should they pay in advance. I responded that my AST was with their daughter who merely can only just afford her monthly food bill. If her parents decide to stop paying the rent for any reason I have no way of contacting them in Dubai and don't wish to go that route. My gut feel has alarms going off and im not comfortable with their refusal to pay an extra month acting as additional deposit. Would anyone else do differently?

Mark Alexander

10:25 AM, 21st May 2015
About 4 years ago

Reply to the comment left by "Dinah " at "21/05/2015 - 10:14":

Hi Dinah

Is it your tenants desire to remain as a tenant for a longer period?

If so, you could offer to enter into a new tenancy on expiry of the old one on the basis that all rent associated with that tenancy is paid in advance. This would not need to be treated as a deposit providing there are no ongoing payments of rent during the new tenancy fixed term, which could be as short as 1 month or as long as 36 months without any further complications.
.

Romain Garcin

10:26 AM, 21st May 2015
About 4 years ago

If the tenancy agreement states that the rent is payable monthly but 2 months in advance then, following Johnson v. Old, I don't think that it could be deemed a deposit.

In any case, IMHO this seems like a complicated proposition that won't bring much security.

Jay James

10:29 AM, 21st May 2015
About 4 years ago

Reply to the comment left by "Dinah " at "21/05/2015 - 10:14":

The parents stated reason for not paying an extra month in advance sounds incoherent. I think your right to be careful, but don't let it sour the relationship. Just serve notices correctly and as soon as legally possible.

Mark Alexander

10:53 AM, 21st May 2015
About 4 years ago

Reply to the comment left by "Romain Garcin" at "21/05/2015 - 10:26":

I agree Romain, but reading between the lines (and I accept that my assumption could be wrong) I suspect the AST is a standard NLA issue and certainly wont have such bespoke provisions built into it.
.

Dinah Pickering

17:00 PM, 21st May 2015
About 4 years ago

Reply to the comment left by "Mark Alexander" at "21/05/2015 - 10:25":

Hi Mark, Yes this is exactly what I offered to the tenant a new fixed term of 6 months with again advanced payments as before from the parents who reside in Dubai. Basically the parents said 'no' and they only want a month to month periodic tenancy. Yes the tenant would like to stay and I feel sorry for her as she has now after quite a lot of support eventually started to settle although the red hair dye and the regular boyfriend will not be missed. Yes the AST is a standard NLA where I input monthly rental. This is why I felt reassured to read Mark that you also advised to enter into the new tenancy, but Daddy said no so now Daddy can pick up the pieces of a daughter left in the UK who for the last 5 months has had a very caring Landlady... lesson learnt do not do favours for ex-neighbours which the daughter is.

Dinah Pickering

17:14 PM, 21st May 2015
About 4 years ago

Reply to the comment left by "Jay James" at "21/05/2015 - 10:29":

Hi Jay, Thank-you for your comment and my gut feeling agrees 100%. I feel the Father has a little ego since he proudly showed me his tax free Dubai payslip when he paid 5 months rent originally and now feels 'out of principle' as he puts it he will not pay upfront again. Meanwhile his daughter who is just over 18 has to pack up and leave.

Jay James

19:32 PM, 21st May 2015
About 4 years ago

I don't have children, but six adult nieces and nephews (and a great nephew!). My principles and regard for law would go out of the window in the blink of an eye to benefit them.

Mark Alexander

19:34 PM, 21st May 2015
About 4 years ago

Reply to the comment left by "Jay James" at "21/05/2015 - 19:32":

Oh dear!

And there's for you?
.

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