1 month Rent up front ?

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    1 month Rent up front ?

    Hi please could you advise me if I clearly state in the AST that I require 1 month in hand rent would that be ok ? Not as a deposit. Tia

    #2
    Rent is usually paid at the start of the month in advance for the next month. So not sure what you mean...


    If you mean you want an extra month, not as a deposit.. you can't do that -- it would be a deposit.

    Comment


      #3
      If by by "I month in hand" you mean:

      Month 1 pay rent for months 1 and 2
      Month 2 pay rent for month 3
      Month 3 pay rent for month 4
      and so on until you get to
      Last month when no rent is payable

      then the rent paid for month 2 is not in my view a deposit. However, my view may not be shared by a judge. Logically though, if the rent paid for month 2 is a deposit because it is paid a month before month 2 begins, then all rent paid after month 1 will also be a deposit. If the tenancy was for, say 6 months, the minimum "penalty" payable for non-protection would be 5 months' rent and the maximum does not bear contemplation.

      Protecting deposits and complying with the requirements may be a drag, but given the choice between the certainty achieved by protection and the uncertainty involved in any scheme designed to get round protection which has not been approved by a superior court, go for certainty as getting it wrong will be expensive.

      Comment


        #4
        If by rent in hand, you mean that you, the landlord have control of money to be used for a future month, the month would have to be identifiable (probably quite specifically, so the last month of the fixed term, rather than the last month of the tenancy).

        The case law that (at least at the time of writing) outlines the difference between rent paid in advance and a deposit has as one of the key elements that the tenant must be certain that they have paid the rent for a given month, so that, if the landlord asked for it again, they could confirm it had been paid. As the last rent month of a tenancy is not always knowable in advance, it fails that test.

        As the definition of a tenancy deposit "in relation to a shorthold tenancy means any money intended to be held (by the landlord or otherwise) as security for the performance of any obligations of the tenant, or the discharge of any liability of his, arising under or in connection with the tenancy" the rent in hand would seem to meet the definition.
        When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
        Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

        Comment


          #5
          Originally posted by bigbjv View Post
          Hi please could you advise me if I clearly state in the AST that I require 1 month in hand rent would that be ok ? Not as a deposit. Tia
          Depends EXACTLY how tenancy is worded about rent & deposit. Please quote the EXACT wording of your rent & deposit sections. Otherwise hard to answer...
          I am legally unqualified: If you need to rely on advice check it with a suitable authority - eg a solicitor specialising in landlord/tenant law...

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            #6
            Thanks for the info. We don’t take deposit at the moment. How it works out for us is the last month is paid for. When they take out the AST 12 months but it’s works out 11 payments as we take the month in hand. 👍

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              #7
              If that payment is a deposit or not depends more on legislation than what you think you've set up.

              Kindly answer questions, please.
              I am legally unqualified: If you need to rely on advice check it with a suitable authority - eg a solicitor specialising in landlord/tenant law...

              Comment


                #8
                Originally posted by bigbjv View Post
                Thanks for the info. We don’t take deposit at the moment. How it works out for us is the last month is paid for. When they take out the AST 12 months but it’s works out 11 payments as we take the month in hand. 👍
                So (a) there is nothing in the tenancy agreement described as a deposit (b) over a year you only take an amount equal to a year's rent (c) the rent is paid more or less as set out in post 3.

                Comment


                  #9
                  Originally posted by bigbjv View Post
                  How it works out for us is the last month is paid for. When they take out the AST 12 months but it’s works out 11 payments as we take the month in hand. 👍
                  What if the tenancy continues beyond 12 months?

                  When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
                  Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

                  Comment


                    #10
                    Originally posted by jpkeates View Post
                    What if the tenancy continues beyond 12 months?
                    The tenancy does not in fact continue. Assuming all the conditions are fulfilled, it will be followed by an SPT. Under the agreement the tenant will not have to pay any rent at the beginning of the last month. When the SPT starts rent payments will be "normal". Of course if the tenant intends to stay and pays rent at the beginning of the last month it will implied that the month-in-hand arrangement continues. However, I do not see how the landlord can insist on it.

                    Rent in hand is fine for a lodger or lock-up garage. The security it gives is satisfactory because if the tenant does not pay the arrangement can be terminated without going to court. For an AST, apart from the possibility that a judge will find the arrangement involves a deposit, it can lead to complications or disputes and does not provide the security that a deposit does for damage caused by the tenant - which is what most landlords want.

                    Comment


                      #11
                      Originally posted by Lawcruncher View Post
                      The tenancy does not in fact continue.
                      Well, it may continue if the tenancy agreement provides for it, but I was speaking loosely.

                      What if the let continues beyond the initial 12 months?

                      When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
                      Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

                      Comment


                        #12
                        Think we need to cut to the chase here. While it might be possible to make a case that the OP might get away with this strategy as a deposit alternative, it is extremely inadvisable and highly dangerous.

                        Don't agree with you Lawcruncher (at least from my perspective) that the predominant point of a deposit has to do with damages for most landlords. Unpaid terminal rent is far more important. Damages are extremely difficult to recover from the deposit, and often not worth the effort.

                        Comment


                          #13
                          I've not had many issues with claiming damage from a deposit, but I agree that rent is a bigger issue (and the limit to the deposit value the more incomprehensible).
                          When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
                          Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

                          Comment


                            #14
                            Originally posted by jpkeates View Post
                            Well, it may continue if the tenancy agreement provides for it, but I was speaking loosely.

                            What if the let continues beyond the initial 12 months?
                            The OP seems to be saying that the tenancy is for 12 months which makes it fixed term. If that it was it is then presumably one way or another the agreement sets out what rent for which periods is paid when.

                            If the tenancy is periodic with an initial long period some different drafting is required. The point is that (ignoring statutory intervention) whilst at the outset the parties will not know when the last month is they will when a notice to quit is served. Once the notice has been served the tenant knows when to stop paying rent.

                            The important point in all this is that when the landlord receives the rent it is not being "held" to be applied as rent when the first day of the period to which it relates arrives. It is actually rent which just happens to be due before the period to which it relates.

                            Comment


                              #15
                              Originally posted by AndrewDod View Post
                              Think we need to cut to the chase here. While it might be possible to make a case that the OP might get away with this strategy as a deposit alternative, it is extremely inadvisable and highly dangerous.
                              I agree. Whilst I am fairly confident that my analysis is correct, there is no certainty that a busy county court judge will not see rent in hand as an attempt to get round the protection provided by Parliament. Even the higher courts cannot be guaranteed to reach decisions which do not confound the expectations of lawyers. The appeal courts in particular seem to relish making decisions which highlight the deficiencies in the drafting of statutes.

                              Originally posted by AndrewDod View Post
                              Don't agree with you Lawcruncher (at least from my perspective) that the predominant point of a deposit has to do with damages for most landlords.
                              I was not suggesting that. I was just saying that landlords want deposits to cover damages and that rent in hand does not do that.



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