Letting Agent won’t release rent (6 months paid in advance)

by Readers Question

12:28 PM, 7th November 2013
About 5 years ago

Letting Agent won’t release rent (6 months paid in advance)

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Letting Agent won’t release rent (6 months paid in advance)

My tenants have paid 6 month rent in advance ( as they did in the previous 6 months with no problems) due to them being students.

The Letting Agent is dragging its feet and will not release the 6 months rent to my bank account stating the tenants have to sign a form allowing this to happen. Letting Agent won't release rent

Previously there was no mention of the tenants having to sign a form.

Tenants have been in my property since 18th October and I have not received any rent payment, I have had many conversations with staff at my letting agents and they keep fobbing me off.

I am unsure as to what to do next, what would you do?

Thanks

Michelle



Comments

Mark Alexander

12:35 PM, 7th November 2013
About 5 years ago

This doesn't bode well.

Does your letting agent carry Client Money Protection? My concern here is that they could be using your money to fund their business, it happens!

Check whether they are members of ARLA, NALS and/or SAFEagent.

Do check their Terms of Business and see it this is mentioned in them. If it isn't and if they are members of the above organisations and/or The Property Ombudsman service threaten to report them if they don't pay you your money immediately.

Report them to your local trading standards office and seek professional advice.

Also, check out other reviews for your agent left on http://www.allagents.co.uk/ and add your own review.

Good luck and please let us know the outcome.

We operate a no name and shame policy - please see >>> http://www.property118.com/what-property118-is-not/
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Alex Chard

12:41 PM, 7th November 2013
About 5 years ago

We don't release 6 months rent up front to a landlord, unless the tenant gives us permission.
We keep the rent in a separate client account and pay the landlord monthly as per the AST. This protects the tenants if the landlord goes bankrupt.
The rent is also protected throughout the tenancy, as we have client money protection in place, and the rent is in the client account.

I'd check if your LA has CMP, and if the money is in a designated client account.

The concern is that they've not paid any rent. Have they given a reason for this? You should have had the first month's rent by now.

12:45 PM, 7th November 2013
About 5 years ago

Hi Michelle,

No Ombudsman will consider your case until you have gone through the correct complaints procedure of the agent.

Ask the agent for the complaints procedure. It should be on their website somewhere.

Then follow that procedure.

If that does not bring any joy, then follow what Mark has said.

It might just be a case of speaking to a senior person at the agency.

Whatever happens, you are due this month's rental payment.

Industry Observer

13:25 PM, 7th November 2013
About 5 years ago

I know the exact legal answer to this and Alex you are incorrect. But that is not the real issue here the real issue is whether the agent has handled the money correctly in terms of wording the tenancy agreement to cater for the 6 months up front. I'd bet my mortgage he hasn't and therefore Michelle you run the risk of a penalty claim, handy for student loan paybacks!!

Anyway to the core issue.

The legal position here is very clear and not how I used to believe which is more in line with ASlex. We always tried not to release money paid up front, mainly to protect the Landlord from themselves. After all what can the LL do with the money you daren't spend it in case it becomes a frustrated contract and has to be repaid.

Or the LL is in breach and the tenants leave and are entitled to repayment of the unpaid portion of the rent.

Out of curiosity Michelle why do you want it releasing to you?

The correct legal position is that the LL is entitled to be paid the money, and the agent has no right to hang onto it, or make any daft statements about needing authority from tenants. The issue here is do the tenants know or think the money has been paid to the Landlord? I doubt they would be happy if they knew the agent was hanging onto it.

I used to believe that the LL weas only entitled to the rent as it legally fell due i.e. each month and therefore the agent should be releasing it on a monthly drip fed basis.

This is incorrect and the landlord is entitled to all the rent. Interesting question is on what legal basis does the agent think they should hang onto it?

With today's near negative client account interest rates the agent will be earning peanuts, if anything on it. And Michelle you'd earn next to nothing too, but still interested to hear from a Landlord why they want the money up front.

Mind Mark is right your biggest danger is if the agent goes bust. I don't always agree 100% on issues and problems with Mark, but here I do.

And with Alex and Vanessa as even if the agent was right (which they are not) why are they not releasing it monthly?

Sounds a bit ominous to me.

Alex Chard

13:57 PM, 7th November 2013
About 5 years ago

Reply to the comment left by "Industry Observer " at "07/11/2013 - 13:25":

I agree 100% that this particular case sounds ominous, and I would encourage Michelle to chase them up on this. Your post should help her a lot.

In general, however, we'll continue to get agreement from both tenant and landlord as to what happens with the money. We'll always suggest it staying with us, and get it in writing.

Industry Observer

14:02 PM, 7th November 2013
About 5 years ago

Alex

Don't blame you, but if the Landlord doesn't agree then they are entitled.

Remembering that the LL is client and you have a duty to do your best for him, interesting thought just occured to me.

If the tenant pays 6 months up front do you think the LL is best served if you ask the tenant whether the money should be released to the LL - when given the chance they may say "no"? And legally the LL is entitled to it no matter what the tenant's preference?

Jamie M

14:43 PM, 7th November 2013
About 5 years ago

Michelle - Just serve them with a statutory demand, you can do it online, its cheap and it will have them hopping into action asap. you don't need a lawyer or anyone else to do it and if they done jump the next steps are very unpleasant.
See
https://www.gov.uk/statutory-demands

Mark Alexander

14:48 PM, 7th November 2013
About 5 years ago

Reply to the comment left by "Industry Observer " at "07/11/2013 - 14:02":

The law is as I suspected it should be but I couldn't point to case law or legislation to confirm my understanding, can you and if so where can I find it please?
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Romain Garcin

15:03 PM, 7th November 2013
About 5 years ago

The landlord's agent is just that, so any payment he receives on his behalf must be promptly forwarded unless it is specifically agreed between landlord and agent that the agent holds the money, which obviously is not in the landlord's interest so I don't see a landlord agreeing.
It even puts the agent at risk since it makes him liable to the landlord.

When a tenant pays money fto the agent it is deemed to have been paid to the landlord, so it is nonsensical to ask the tenant's permission to transfer it to the landlord...

ian

16:27 PM, 7th November 2013
About 5 years ago

When you get this sorted change Agents or write to tenants and ask them to pay directly to you in future.

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