Tenant Offering to Pay Rent in Advance

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    Tenant Offering to Pay Rent in Advance

    Hi Everyone,

    I'd welcome your advice, I'm in the process of renting out a property and have been disappointed in the lack of interest from potential tenants, However, I've been approached by an EU National new to the UK ( 6 weeks ) and keen to rent the house. He is awaiting the arrival of his wife and child to the UK and although working is just about to start a new job near where our property is located. The problem is clearly this potential tenant has no employment history to speak of, only opened a UK bank account recently and has no guarantor options . Recognising our concerns the guy has offered to pay rent quarterly in advance , and I would probably suggest he makes the first payment then pays monthly , meaning he will always be 2 months in advance. So my question is …. given the lack of opportunity to make any real checks would you be prepared to rent to him or would there be any other checks possible you could suggest ?

    Thanks for your advice

    Grim

    #2
    Can he get a guarantor from his proposed employer in the UK? I have done this before successfully until S. African tenant became established in the UK working for a major car company.

    Have you done checks on his right to rent in the UK?

    Ask for bank statements from his home country - originals only.

    Be very aware - paying rent that far upfront sounds suspicious and an oversupply of money. What is his job and where is he coming from - don't give too much detail?



    Freedom at the point of zero............

    Comment


      #3
      Someone moving to a new country doesn't,unless they are an idiot,go without a cash reserve. If they then get a job faster than expected they have spare money to pay rent upfront.

      I would look very closely at their history though - agree with bank statements from his home country but I'd also pour over what they have earned here and what they spent it on, reference from the employer they have currently (and phone them to check its genuine), phone new employer to check new job is intended to be permanent.

      I'd probably prefer to drop the rent and try for a different tenant.

      Comment


        #4
        What he's doing is quite common, because he'll find it difficult to rent otherwise - he'll fail most credit checks.

        However, if you take rent in advance and ask for payment in month two, what you're doing is creating a deposit which needs protecting like any other deposit.

        Either take the normal rent in advance or don't take on the tenant.
        Simple, binary choice.
        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 jpkeates View Post
          However, if you take rent in advance and ask for payment in month two, what you're doing is creating a deposit which needs protecting like any other deposit.
          I don't believe it is a deposit, because it is payment for an agreed liability and is not refundable, whereas a deposit is security against tenant's default and is potentially refundable.

          However, there may be a case for it being a deposit if the tenancy can become statutory periodic because the tenant will have paid 3 months' rent at the start of a period, but can end the tenancy in less than 2 months.
          But if the tenancy were to become contractual periodic with minimum 2 months' notice by the tenant ...

          Comment


            #6
            Beware pop up brothels: https://forums.landlordzone.co.uk/fo...on-8-ground-7a

            My tenant was an 'EU National' also.

            Comment


              #7
              Originally posted by MdeB View Post

              I don't believe it is a deposit, because it is payment for an agreed liability and is not refundable, whereas a deposit is security against tenant's default and is potentially refundable............. ...
              Probably not that simple & it would depend exactly what tenancy agreement and receipt for money etc etc said...

              Beware, see....

              https://www.landlordlawblog.co.uk/20...rent-payments/
              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 MdeB View Post
                I don't believe it is a deposit, because it is payment for an agreed liability and is not refundable, whereas a deposit is security against tenant's default and is potentially refundable.
                The issue is that it's a payment taken against a future liability.

                A tenancy deposit is "any money intended to be held ... as security for ... the performance of any obligations of the tenant, [or] the discharge of any liability of his"

                Because it's not clear which specific periods the advance rent is for, the payment is a deposit; it isn't rent and can't really be anything else.
                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


                  #9
                  Even if the terms are "rent of £X to be paid monthly 3 months in advance, the first payment of £3X to be paid on or before <start of tenancy>"?

                  Comment


                    #10
                    That would be fine - it's the next payment being due in month two that's a problem.
                    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


                      #11
                      But that is exactly my proposal: £3x month one; £x in month 2 and each month thereafter until 2 months' notice is given.

                      Comment


                        #12
                        That's the problem then.

                        The two month's rent paid in advance that isn't rent yet is a deposit.

                        The tenant has paid three month's worth of rent.
                        The first month's rent is due when they move in, and has been paid.
                        The second month's rent is due and paid by the tenant.

                        There are two month's rent value held by the landlord which is intended to be used as rent at some point in the future.
                        That's a deposit.
                        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


                          #13
                          Hi Everyone,

                          Thank you all for your comments , I confess I hadn't considered the issue of advance rent being regarded as a deposit.

                          Using the logic of 3 months being paid before the tenant moves in, then paying monthly , does the monthly rent not effectively become rent for the third month hence, so not a deposit or am I oversimplifying ?

                          The other option I guess is that I simply restructure the proposal to be a deposit of 3 months rent , with the first month rent paid in advance as normal. With this I recognise I won't be able to touch the deposit and will place it in the DPS but it will still serve as protection should the tenant either fail to pay rent or damage the property.

                          Thanks again for the advice

                          Grimm

                          Comment


                            #14
                            If you take 3 months advance rent and nothing else till month 4 then no problem. However, if you start collecting rent in month 2 then part of the original payment is likely to be a deposit

                            Comment


                              #15
                              I would take six months rent up front, and no deposit, issue s21 at 4 month point, then switch to monthly at 6 month point.

                              If month 7 rent is not forthcoming, you can immediately apply for a possession order.

                              Comment

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