Two months rent in advance?

Two months rent in advance?

0:02 AM, 19th April 2023, About 2 years ago 8

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Hi, in the last few years, I have stopped taking tenancy deposits in the fear of breach of compliance. Nonetheless, as a result of adopting to aforesaid practice, I have had instances, where tenants abandoned properties or left properties without giving any valid notice or they have left the property with piled-up rubbish.

I have had recent advice from a solicitor who has advised that I can take two months’ rent in advance. The first month is to be used as the first month’s rent and 2nd month’s rent is to be used in the last month of tenancy.

This will then help me to get around this issue without being non-compliant with the tenancy deposit scheme. My only concern is that this might be seen as hidden deposit taking and if the matter ever proceeded to Court then the Judge might take a different view on this. Property118 readers’ views on this would be welcoming.

Thank you,

Simon

Editors Note: All landlords are required by law to protect any deposits taken for a tenancy within 30 days of receiving the deposit or within 30 days of the tenancy becoming an assured shorthold tenancy. Tenancy deposits are capped at the equivalent of 5-weeks’ rent for assured-shorthold tenancies with an annual rent of up to £50,000 or 6-weeks’ rent for tenancies with an annual rent of £50,000 or more.

In the Tenant Fees Act 2019: Guidance for tenants. The only payments in connection with a tenancy that a tenant can be asked to
make are:
• The rent
• A refundable tenancy deposit capped at no more than five weeks’ rent where your total annual rent is less than £50,000, or six weeks’ rent where your 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;
• A default fee for late payment of rent and replacement of a lost key/security device giving access to the housing, where required under a tenancy agreement.

In the FAQs of the Tenant Fee Act 2019 they ask:

Q. A landlord or agent has told me that I will have to pay more rent in the first few months to cover the cost of banned fees, can they do this?

A: No. Under the ban a landlord or agent cannot require you to enter into an agreement that ‘front loads’ the rent at the start of a tenancy i.e. by charging more for the first month(s) of the tenancy (although in some circumstances a landlord may expect payment of rent upfront). The amount of rent charged should normally be equally split across the first year of the tenancy. However, after the tenancy has begun, a landlord can reduce or increase your rent without breaching the fees ban if you agree to this or under a rent review clause in the tenancy agreement (provided that the rent review clause permits both a rent reduction or increase according to the circumstances).


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Comments

Monty Bodkin

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7:07 AM, 19th April 2023, About 2 years ago

Pack it in, you clearly don't know what you're doing.
This subject has been done to death years ago.

Crossed_Swords

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8:16 AM, 19th April 2023, About 2 years ago

My agency promotes a scheme called Flatfair which is an insurance based deposit system. I am not advocating it particularly but it is an alternative and popular with tenants. The amount covered is higher than 5 weeks rent.

DPT

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10:59 AM, 19th April 2023, About 2 years ago

I hope you didn't pay for that advice! If you are going to take advice on lettings from a solicitor then for goodness sake make sure its a specialist housing solicitor that knows what they're doing. This practice of taking the last months rent in hand stopped a long time ago when there were cases of if being deemed an unprotected deposit. It is possible to do it if its clear in your tenancy agreement which month the additional payment is meant to cover, but as tenancies become rolling after any initial/fixed term, its easy for a landlord to make the mistake of keeping hold of it on the basis that the tenancy hasn't really ended. That would be enough to breach the deposit legislation.

Seething Landlord

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11:50 AM, 19th April 2023, About 2 years ago

Use a deposit replacement scheme if you are happier dealing with an insurance company than a deposit protection adjudicator, or get a grip and take deposits, ensuring that you comply with the regulations.

Trying to circumvent the regulations is almost certain to end in tears.

LordOf TheManor

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14:14 PM, 19th April 2023, About 2 years ago

Simon

Why are we NOT surprised with your no deposit issues??

Tenants without a deposit have 'no skin in the game', so you need to make their relatives responsible for any clearing and cleaning missed. If no deposit is taken, it only leaves you to rope in guarantors then, doesn't it? Would they leave their muck to be paid for by their nearest and dearest?

Tenants with no guarantor? Well - pay a deposit then, or use a deposit replacement scheme.

Neither side can have it all ways.

Simon Hall

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18:06 PM, 19th April 2023, About 2 years ago

Reply to the comment left by Monty Bodkin at 19/04/2023 - 07:07
Mark Alexander created this forum for the purpose of healthy discussion and learn from either experienced or non experienced. I never professed to know it all Landlord despite being a landlord for over 20 years owning multiple properties and managing single handedly but never stopped learning.

Your personal attack on others only shows how much of depth you carry as a person.

Mek Kah

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10:00 AM, 20th April 2023, About 2 years ago

Reply to the comment left by Simon Hall at 19/04/2023 - 18:06
Glad someone said it!

Jeremy Pickles

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13:58 PM, 21st April 2023, About 2 years ago

Reply to the comment left by Crossed_Swords at 19/04/2023 - 08:16Flatfair is not an insurance based system, otherwise it would have to be FCA regulated which it is not. It works by Flatfair "buying the tenant's debt" therefore paying the landlord the money owed and recovering separately from the tenant. However, it is in their discretion to do this or not (read their Ts&Cs). There are deposit alternatives which are insurance based & FCA regulated - Zero Deposit (offering 6 week's cover) and Reposit (offering 8 week's cover for the landlord). Note that the Government's "How to Rent Guide" has recently been updated and recommends to use an FCA regulated provider.

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