Tenant question - Discount in return for rent payment in advance.

[lewisdh123]

Hi guys

I was made redundant in September 2018 and used the situation as an opportunity to start my own online business. So far it's going well and I am earning just enough to cover my cheap rent and bills.

I have excellent credit rating and have always paid my rent on time.

I need to move out of my existing studio apartment as it has a damp / mould problem that is effecting my health. It's much easier to just move than to ask the landlord to fix it. The property is very cheap to rent but run down.

I spoke to an estate agent that asked if I was employed. I said no but I have proof of savings that would easily cover many years of rent. She said savings aren't taken into account only income and that self employed people need 2 years of accounts. She said that I could have a million pounds in the bank and it wouldn't make a difference only income makes a difference.

She said that in order to be accepted I would need to pay the full 12 months rent in advance. I thought maybe I could counter offer 6 months rent in advance with a 6 month break clause in the contract?

If I do end up offering 6 or 12 months rent in advance should I ask for a discount and if so how much? Obviously it benefits the landlord having all the rent in advance as there is 0 risk of default. It also puts me in a weaker position as I have no leverage if repairs etc are needed. There is also a risk that the property may be repossessed or the landlord will go bankrupt.

So basically my question is should I ask for a discount and if so how much? 5% 10% 15%.

Your thoughts would be appreciated. I don't want to 'take the piss' by asking for too big a discount but at the same time I don't want to pay in advance without getting any incentive to do so unless I have no choice.

[leaseholder64]

I can't see an agent giving a discount. Also the reason for 12 months is that agents like 12 month contracts,

To be honest, I can't imagine a landlord giving a discount either, but if they did, I imagine it would be based on the difference between the immediate payment and the nett present value if paid monthly, based on savings account interest rates. That isn't going to be much.

[jpkeates]

You basically don't have much choice, so you're not really in a position to negotiate a discount.
You're paying in advance to reduce the potential risk to the landlord, you're not doing them any favours.

I actually don't agree with the agent, as some landlords would be fairly happy to let to someone who had savings (coupled with a decent credit rating).
But it would be more difficult than doing nothing, and now the agent can't charge you any fees for trying, they're not likely to be that incentivised to assist.

On a practical level, it would probably have to be set up as a rent of x for y months with a pre-agreed increase to the "normal" rent after month y. But I can't see a landlord going for it.

[DPT57]

Try a different Agent

[lewisdh123]

Thanks for your replies. I might ask for a small discount such as 2% and see what they say I guess there is no harm in asking?

There is additional risk to me paying up front and the landlord does have the benefit of getting interest on the money.

[jpkeates]

Have you looked at the interest rates on savings accounts?

There's no harm in asking (provided being laughed at is something you can live with).

[boletus]

I guess there is no harm in asking?

Depends on the landlord/letting agent.
If you're in a less than perfect position anyway, it might be the final straw.
Haggling over the rent sets off alarm bells for me.

[lewisdh123]

OK points taken I won't ask for a discount you guys are the experts so I will take on board what you have said. Is asking for a 2% discount really laughable tho? There are various savings options that would pay good interest such as low risk peer to peer lending, certain ISAs etc.

Some people insist that paying upfront warrants a discount but I wouldn't want to miss out on a suitable, reasonable cost place by haggling. Although I don't personally see it as an alarm bell if I haggle as it shows I am careful with money and costs despite having large savings. Someone with large savings that was reckless wouldn't care less about the rent cost as they have a ton of money to blow.

It seems strange to me that the fact I have over £68,000 in savings and rent is £625 per month isn't taken into account and they will still deem me as high risk want a year up front. I mean surely I am the perfect tenant? My excellent credit rating shows I have always managed money very well, my savings clearly show I can afford the rent 100 times over and good references too. Am I missing something?

[Lawcruncher]

Try a different Agent

Indeed. Try and find one whose education went beyond learning joined-up writing.

Am I missing something?

No. See comment above.

[mariner]

Try offering LL/Agent 6 months rent in advance for fixed term, then require SPT after you have found suitable properties.

[boletus]

Am I missing something?

A couple of bits;

You're running a business from home.
You don't have any accounts for that business(?).
You're causing more wear and tear on the property than someone out working all day.
It's very difficult to evict a tenant and looks like getting even harder.
You can easily stuff your savings in a sack and disappear.
Anti landlord websites regularly advise tenants to haggle on the rent. Who wants a tenant that dislikes you for ideological reasons? (In reality very few tenants haggle, its a very long term business relationship not buying a used Nissan Micra.)
You're looking for the type of landlord greedy/needy enough to take a punt on a higher risk.
You're leaving your current flat because you're not happy with your landlord.
And you want a tenner knocked off the rent.

Some of that is most unfair but it may help to secure a tenancy if you're at least aware of it.

[Hudson01]

Agree with the above comments, it smacks of desperate asking for such a small reduction in rent (i am not saying it is, it could be viewed as that), and as said above would ring alarm bells..... a prospective tenant said to me on a viewing (he did not get the property), '' i think i can afford the rent''.............. really ! I don't want to hear words like that, next one please.

[lewisdh123]

A couple of bits;

You're running a business from home.
You don't have any accounts for that business(?).
You're causing more wear and tear on the property than someone out working all day.
It's very difficult to evict a tenant and looks like getting even harder.
You can easily stuff your savings in a sack and disappear.
Anti landlord websites regularly advise tenants to haggle on the rent. Who wants a tenant that dislikes you for ideological reasons? (In reality very few tenants haggle, its a very long term business relationship not buying a used Nissan Micra.)
You're looking for the type of landlord greedy/needy enough to take a punt on a higher risk.
You're leaving your current flat because you're not happy with your landlord.
And you want a tenner knocked off the rent.

Some of that is most unfair but it may help to secure a tenancy if you're at least aware of it.

Yes that's true but a few points to note.

The business consists of selling products online only (no stock to hold, no customer to come calling, no noise etc) you wouldn't know it existed unless I told you.

I am happy with my landlord he is a good guy and we always get along well. He has tried to help resolve the problems in the property but it hasn't worked so far. It's easier to move than nag him about these problems and risk damaging the relationship and deal with the hassle of major work needed to fix it.. The property isn't in great condition but the price I pay reflects this so I don't feel ripped off or anything.

I think I will be able to get an excellent reference from the landlord.

My credit rating is excellent so I may not be as high risk as you think.

Would I really only suit a needy / greedy landlord?

There are a lot of Anti Landlord websites yes but is this site pro landlord anti tenant?

[leaseholder64]

The point that was being made is that landlords would probably want to avoid tenants who frequent anti-landlord sites, and behaving in a way advised by such sites suggests that that might be the case.

On the other hand, if trying to bargain over rents is risky to tenants, that tends to confirm that UK residential rentals is a broken market.

[jpkeates]

There's a difference between working from home and running a business in a property.
The latter raises all kind of issues with planning, insurance, mortgage lending etc.

It's bad news for a landlord.