How to calculate rent arrears if the first and last months rent has been paid in adv

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    How to calculate rent arrears if the first and last months rent has been paid in adv

    Hey guys just a quick question. If the tenant pays first and last months rent in advance but doesn't move out when specified when can the section 8 be served? Would it be another 2 months of non payment?

    Thanks

    #2
    The "last month's rent" sounds like a deposit to me, so you should have that protected.

    You can serve a section 8 notice for any amount owed in rent, but if you want to use ground 8, the tenant has to owe two month's rent (assuming the tenancy is monthly).
    You calculate all rent due, less all rent paid.

    If the last month's rent is a deposit, that might be an issue in court.
    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


      #3
      Agree, last month's rent probably a deposit so you will be liable to pay tenant up-to-3-times ALL deposit money (ie likely what you thought was deposit plus last month's rent). Ouch!.

      You can serve a valid s8g10 if only 1p is underpaid for only 1 day. Funny how many "experts" and agents don't seem to know this!
      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


        #4
        Hey guys last month rent is not a deposit. As tenant does not need to pay rent when they give notice they are leaving.

        Comment


          #5
          Just after a bit of clarification on this one.

          So from you advise, when the tenancy started you took their deposit, their first months rent in advance and another months rent as well to cover the 1 month notice period when the tenant wants to leave. Is that right?

          Comment


            #6
            Originally posted by hazedunks View Post
            Hey guys last month rent is not a deposit. As tenant does not need to pay rent when they give notice they are leaving.
            That's going to need to be very carefully covered in your tenancy agreement.

            Housing Act 2004
            "[A] tenancy deposit”, in relation to a shorthold tenancy, means any money intended to be held (by the landlord or otherwise) as security for—
            (a)the performance of any obligations of the tenant, or (b)the discharge of any liability of his, arising under or in connection with the tenancy."

            It's hard to see how this money doesn't meet that definition.

            Given that it's hard to know which the last month's rent will be in advance, it's very hard to see how the sum of money can be "rent" and not a deposit.

            What does your tenancy agreement say about this sum of money?

            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


              #7
              I understand that some people have got away with taking a 'last month' rent in advance on the basis that it was the last month of the fixed term, which is a period thats knowable in advance. That would have to be clear from the agreement though. If its just the last month that they're a tenant at the property, then its not knowable and I would have thought would almost certainly be regarded as a deposit by a well-informed judge.

              Comment


                #8
                Hey guys in the AST it is always worded as

                " No deposit was received or paid. The tenant has only paid the first and last months rent" and this is for all fixed term AST.

                Comment


                  #9
                  Originally posted by ExpertInAField View Post
                  Just after a bit of clarification on this one.

                  So from you advise, when the tenancy started you took their deposit, their first months rent in advance and another months rent as well to cover the 1 month notice period when the tenant wants to leave. Is that right?
                  That is correct.

                  Comment


                    #10
                    Originally posted by hazedunks View Post
                    Hey guys in the AST it is always worded as

                    " No deposit was received or paid. The tenant has only paid the first and last months rent" and this is for all fixed term AST.
                    Taking first and last months rent in advance happens in the US, although some states now don't allow it. I've never heard of this arrangement in the UK before. Did you take a deposit? the above states not and in the post above you say you did. I think you would encounter issues if this went to court.

                    What does the agreement say about the end of the fixed term - is it rolling monthly or is another AST needed? I guess it could be rolling monthly by default if not stated.

                    I don't understand why you would require first and last months rent and no deposit if post 8 is correct. You don't then have a deposit should you need to retain any of this for damages to the property.

                    If the tenant hasn't informed you they are leaving then you do not know exactly when the last month is going to be. You could issue an S21, if the AST term has passed, which gives them 3 months notice to leave at this time and if they have just stopped paying rent then they would owe two months. Otherwise the S8 would just be for the missed rent payment, i.e. one months rent.

                    Comment


                      #11
                      Originally posted by hazedunks View Post
                      Hey guys in the AST it is always worded as

                      " No deposit was received or paid. The tenant has only paid the first and last months rent" and this is for all fixed term AST.
                      I don't think you understand the law on this issue

                      Comment


                        #12
                        If the law affords someone protection you run the risk of coming a cropper if you try to get round the law. I think it is established that for the purpose of deposit protection a deposit is something which the tenant expects to get back if he complies with the tenancy terms. Accordingly, any sum tendered as rent ought not to be treated as a deposit. However, as far as I know no court has specifically confirmed the point and unless and until it it does it is better to err on the side of caution and avoid unnecessary complications.

                        Comment


                          #13
                          The problem with this arrangement is why the question originally posed arises.

                          You have some of the tenant's money, which is intended to pay some rent at the end of the tenancy.
                          You don't know when that will be, but you do know there will be a last month at some point.

                          Let's say you go to court and the court agrees your possession claim, it's likely to be less than a month (usually 14 days), so the last month's rent would have been due in the past.
                          Which means that the court's decision changes the facts of the case, which is not really helpful.

                          But the order may take time to execute, during which time rent is due, and the bailiffs may give a week's notice and end the tenancy - again the rent payment using the money you hold would have been due with neither you nor the tenant knowing it.

                          That lack of certainty means that you don't know how much your tenant is liable to pay and don't know whether they owe you the money you have in your possession.
                          They probably don't owe it now now, but will in future.

                          Which means the money isn't yet rent but will be at some unknown point in the future.
                          I.e. it'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


                            #14
                            Originally posted by jpkeates View Post
                            You have some of the tenant's money, which is intended to pay some rent at the end of the tenancy.
                            You don't know when that will be, but you do know there will be a last month at some point.
                            Are we not though talking about a fixed term where the last month is known?

                            Ignoring deposit protection, the parties are free to negotiate when what rent is payable when for any period. What you can have includes:

                            · Rent payable by equal instalments in advance - pretty much the standard though not the default.
                            · Rent payable by equal instalments in arrear - the default.
                            · Rent payable by equal instalments partly in advance and partly in arrear - this can happen with an SPT if the rent and tenancy periods do not coincide.
                            · An agricultural tenancy for a year where one instalment is paid on entry and the other after harvest.
                            · An arrangement where one period is always "in hand", that is the rent for the first two periods is paid on the first day of the first period, the rent for the third period is paid on the first day of the second period and so on, but no rent is paid on the first day of the last period.

                            I do not see why there cannot be added to the list an arrangement under which the rent under a fixed term tenancy is payable monthly in advance in the usual way except that the last month's rent is payable at the start. If the rent for the first and last periods is paid as agreed, then the rent for the last period can never be in arrears. The payment made for the last period is applicable only to that period. Accordingly, if the rent for any other period is not paid on time it will be in arrears because it is not paid when due and despite the fact that the rent has been paid for a later period.

                            Comment


                              #15
                              If the specific month(s) the rent is to cover is agreed I agree.
                              So the last month of the fixed term should be fine.

                              The test in Johnson V Old (which was about whether several months rent paid in advance was a deposit) was partially along the lines of - if the landlord asked for the payment of rent the tenant wouldn't pay it because they knew that they already had.

                              If the rent is not for a known month, the tenant wouldn't know if payment was due or not if that landlord asked them to pay it.
                              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

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