Tenant offering to pay 6 months rent up front

Tenant offering to pay 6 months rent up front

12:03 PM, 10th January 2014, About 8 years ago 68

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We have just recently bought a property and are renting it through a letting agent.

They have possibly found us a tenant 🙂

She is currently renting in the area and wants to downsize but she wants to pay 6 months rent in advance.

My feelings are that this is not a good idea.

My husband can’t see a problem, but I am a bit dubious.  Tenant offering to pay 6 months rent up front

Can anybody help me overcome my fears on this?

Many thanks

Sue



Comments

by Mark Alexander

16:00 PM, 13th January 2014, About 8 years ago

Reply to the comment left by "DC " at "13/01/2014 - 13:34":

If the rent period is monthly and the whole 6 months is paid up front and there are no further payments during the first 6 months then I don't see a problem. Where I do envisage a problem is if the AST is worded in such a way as to that rent is due every six months.
.

by Jeremy Smith

19:42 PM, 13th January 2014, About 8 years ago

Reply to the comment left by "Mark Alexander" at "13/01/2014 - 16:00":

I think what you were thinking of Mark, is when a tenant pays weekly, fortnightly, monthly, etc,
then a different notice period would apply, so paying 6-monthly, might, require a longer notice period, as already said, depending upon how the AST is written.

by Industry Observer

8:57 AM, 14th January 2014, About 8 years ago

I've missed this thread saw it start but have been very busy hence delay on my smells posting and the actual wording to go with the clauses already posted. The smells wording goes in the inventory primarily and also in the agreement but as a non standard clause - I will explain and will do this next 48 hours promise.

Meanwhile from what I have seen of this thread the age old issues are creeping back in and I hope Sue P has, as advised by Mark, been setting up her tenancy agreements with the correct wording otherwise as Mark says the advance pauyment will be a deposit.

Johnson v Old made this very clear not, as TDS immediately proclaimed, that rent in advance was no longer a deposit. I can assure you it most easily can be.

Someone referred to taking 2 months deposit and then using it for rent payments. The deposit cannot be touched - unless the tenant agrees - mid term incuding the periodic state and no matter what clauses to say otherwise are in your agreement.

Ben talks sense as usual - Happy New Year me old mucker and sparring partner!! - and I too would be wary of any offer totally unprompted on the tenant's part to pay rent in advance. Why do that until they are asked, if anything it means the baggage they think you will discover is even more serious and damaging to their prospects!!

Remember the agent will have a vested interest in rent up front too has two advantages for them. First they can take all their commission up front and then, because they have already been paid, sit back and do little work when you need their help.

Agree with comments on monthly visits - anything more than quarterly is probably asking for trouble on the peaceful occupancy front

Apologies if these comments repeat anything in the previous three pages of posts.

by Mark Alexander

9:35 AM, 14th January 2014, About 8 years ago

Reply to the comment left by "Industry Observer " at "14/01/2014 - 08:57":

Perhaps you can help me to explain why, if a tenancy agreement isn’t drawn up properly, 6 months rent up front can affect the required notice period.

I know that it can affect the notice period but for the life of me I can’t recall why and under what circumstances, probably because is something I do not come across too often and when I do an alternative and mutually acceptable arrangement is entered into.
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by Robert Mellors

9:40 AM, 14th January 2014, About 8 years ago

Just some thoughts on this matter........

Would the issue be any different if the prospective tenant paid the normal one month in advance at the sign up, but later decided that they wanted to overpay and get into credit on their rent account?

How much time has to elapse between the initial payment and the subsequent overpayment? - 5 minutes, 1 hour, 1 day, 1 week, 1 month, some other period of time? or does it simply have to be a separate transaction (at any time)?

Surely if tenants can overpay on their rent account, and thus be in credit, then there is nothing wrong with them overpaying by 6 months (or any other amount)?

Surely overpaying on a rent account does not change the fundamental terms and conditions, express or implied, of their tenancy agreement, and thus makes no difference to their legal rights or responsibilities?

If overpayments during a tenancy are acceptable, and do not alter the legal position, then the landlord could accept the 1 month in advance, then a few minutes later (i.e. during the tenancy), accept a payment equal to the remaining 5 months rent (or any other amount the tenant is willing to pay), and thus there would be no problem (other than the normal problems as may occur with any other paid monthly tenancy).

by Industry Observer

9:43 AM, 14th January 2014, About 8 years ago

Mark

I thought we had done this subject to death and the reasonings behind the agreement wording rationale when Johnson v Old came out?

Basically is the rent covers the six months and you do not vary the wording in the agreement that it covers 6 months and is then a monthly payment in month 7 so it goes STATUTORY periodic from month 7 then if you don't have a valid s21(1) already sitting on file then when you come to serve s21 of any persuasion in the periodic state you have to give 6 months notice - because the last period of the rent was 6 months, not monthly.

It is fatal to mention monthly in the initial wording.

Jeremy is on the right lines on this.

Alternative is to create the tenancy so that at the end of the initial fixed term the tenancy then goes CONTRACTUAL periodic instead.

Then it is just normal NTQ notice

by Industry Observer

10:52 AM, 14th January 2014, About 8 years ago

@ Robert

I was with you all the way with the tenant paying a small amount, say an extra £50 - £100 a month which could be argued to be an 'in case' safety net for a future single month where they have problems paying.

Though it did still look like that thing the LAW hates most - a contrivance!!

Actually though any payment in advance is exactly that - in contemplation of future commitments and obligations - and so again is a deposit.

Then came your final paragraph and that sank the ship completely - clear contrivance to get round the rules.

As I always say I am amazed at the energy, creativity and emotion agents and landlords put into trying to circumvent regulations and obligations. Seen it with everything since gas safety came in.

Three options

1. Don't bother with a deposit just charge a higher rent each month say an extra
£25 to £50 but not so high as to be challengeable at First Tiuer Tribunal (old
RAC). Try it - a reverse of the tenant wanting a lower rent, charge them a higher
one to cover the deposit.

OR

2. Heaven forbid don't take a deposit.

OR

3. If you have occupied the property before, or will genuinely do so as main
residence in the future, let on a full Assured Tenancy

There is so little you can do to legitimately take even an extra month, and even then if you do you cannot, under Scheme Rules, touch it until end of tenancy, why bother?

by Joe Bloggs

11:07 AM, 14th January 2014, About 8 years ago

Reply to the comment left by "Industry Observer " at "14/01/2014 - 08:57":

'Agree with comments on monthly visits – anything more than quarterly is probably asking for trouble on the peaceful occupancy front'
thats clearly wrong for reasons ive already explained backed up with a link. furthermore my selective and additional licences state inspections AT LEAST every 3 months so 3 months is a max NOT a min.

by Mark Alexander

11:08 AM, 14th January 2014, About 8 years ago

Reply to the comment left by "Industry Observer " at "14/01/2014 - 10:52":

Note that option 3. is only an option if your mortgage lenders consent to it and most will not. Therefore, an assured tenancy is only really an option if you don't have a mortgage and will never require the right to serve a section 21 notice.
.

by Robert Mellors

11:10 AM, 14th January 2014, About 8 years ago

Reply to the comment left by "Industry Observer " at "14/01/2014 - 10:52":

I have not tested this in court, so can't say for sure, but your comment:

"Actually though any payment in advance is exactly that – in contemplation of future commitments and obligations – and so again is a deposit."

surely cannot be correct? I have a tenant who paid rent in advance, and initially there was a Housing Benefit shortfall so she paid the shortfall, but she was then granted Discretionary Housing Payments for that shortfall, but has asked to continue paying the same amount (the HB shortfall) so as to put her account in credit, just in case her benefit ever stops. This credit balance on her account, which is increasing each month, would simply be returned to her at the end of the tenancy, or at any other time she requests it (like paying a set monthly amount on a gas bill then finding you used less gas than expected so are in credit, you have the right to request that credit to be refunded to you). Surely if someone overpays on their rent account it is treated as a similar situation, not as a deposit?

If it was treated as a deposit, whatever the overpayment amount or whenever it occurred, then every month I would have to register a new deposit for her account, and that would be non-nonsensical. I know the "law is an ass" but surely not to that extent!!!!


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