Is two months Rent in Advance instead a solution?

Is two months Rent in Advance instead a solution?

11:17 AM, 14th April 2021, About 8 months ago 9

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Normally I ask for a month’s rent in advance (RIA). Most of my tenants are benefit tenants and claiming UC but if they come through the LA route the Council have always paid the first months RIA.

What if I up this is two or even three months RIA? To try and always cover myself for the situation where I have (on many occasions) found myself in where there have been delays in direct rent payments to me/tenant delays in making sure all the info gets to UC so direct payments are made asap, I’m wondering if this is a solution as the LA pay this to me direct on behalf of the tenant.

Does this have any implication though on issuing S21 or S8’s that may possible follow if the need arises?

DSR



Comments

by Neil Patterson

11:22 AM, 14th April 2021, About 8 months ago

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.

by DSR

11:42 AM, 14th April 2021, About 8 months ago

The LA pays the RIA on behalf of the tenant , then the tenant claims the rent benefit via UC.
If the tenant though leaves before the end of his/her BAP period, this means that although the RIA may pay for the previous month, some rent would still be owing.
I agree this should be taken from the deposit, but I am finding that this never covers the arrears plus damage left upon departure.
As the LA pay the RIA knowing that the will not get this back (and I have has this said by the LA verbally) then surely if I ask for 2 months RIA this covers this scenario?

by David

17:58 PM, 15th April 2021, About 8 months ago

I've never thought that rent in advance was much of a solution to anything really. Just kicking the can down the road. If you do take say 3 months rent in advance you should be aware that you will not be able charge rent again until the start of month 4.

by Chris @ Possession Friend

18:28 PM, 15th April 2021, About 8 months ago

Lots of tenants pay rent of several months in advance, overseas tenants where there's no reference - finance history, students.
What you can't do ( as Neil points out ) is disguise an advance rent as a deposit. ( as long as tenancy agreement is clear about the rent taken and the period that represents )

by Judith Wordsworth

9:06 AM, 17th April 2021, About 8 months ago

Reply to the comment left by DSR at 14/04/2021 - 11:42
LA's usually pay the rent 4 weeks in arrears.
The cost of after tenant repairs is yet another reason I am getting out of landlording.
Only having 2 rental properties, and both tenants vacating at the same time leaving damage not covered by their deposits, has worked out that I've not in reality made any money for the last 2 years of the tenancies. Just as well they were long term tenants.

by zhorik

10:26 AM, 17th April 2021, About 8 months ago

I rented to a tenant on benefits via an agency. They required no deposit from the tenant but instead requested that the rent be paid fortnightly in arrears and that the tenant should pay 6 weeks in advance as the tenant was on housing benefit and had a bad credit rating. The tenant paid 5 weeks in the end and then duly began paying rent after 7 weeks of occupation. All was ok until the end of the lease when the tenant remained. A section 21 was issued and at the court hearing the tenant argued that the advance rent was in fact a disguised deposit as
in the case of Piggott v Slaven (2009) and that as it was not secured it was illegal.The judge agreed and threw the case out. I did some research and discovered that in certain cases where the tenant had a bad credit rating etc the Court of appeal decided in Johnson V Old ([2013] EWCA Civ 415.) that it was not unreasonable for a landlord or their agency to ask for advance rent as long as the payment is purely to pay rent that the tenant would not expect to pay again. To count as a deposit, the payment must be made to discharge the tenant of any liability arising under or in connection with the tenancy. The agency then resubmitted the s21 and quoted the case
The judge threw it out. So be careful when asking for advance rent.. in the end, the money was placed in a scheme rather than go to appeal and eviction was granted, the tenant stayed and a request for bailiff order was made. Unfortunately, Covid and the Government's ban on evictions took place. Three years later the tenant is still in situ.

by David

16:40 PM, 17th April 2021, About 8 months ago

I dont understand why the court considered the 5 weeks advance was a deposit if it was demanded for clearly identified weeks, (ie the first 5) and was used for that purpose, (ie no further rent was accepted covering the same period)?

by zhorik

11:06 AM, 19th April 2021, About 8 months ago

because not all county Judges are up to date with the aw and as Piggot v Slavin pointed out they were regarded as deposits even with Johnson V Old they can be regarded as disguised deposits.

by David

12:19 PM, 19th April 2021, About 8 months ago

But that can surely only be the case if its not clear that its rent, and in this case, it is. I would appeal.


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