Claiming back reduced rent from tennants deposit

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    Claiming back reduced rent from tennants deposit

    Hi All,

    I am sure that this topic has been covered a lot recently but I wanted to ask for specific advice.

    I have a private (residential) tennant paying £10,000 per month in rent in North London. The tennant has asked to reduce the cost in our agreement by 25% to £7,500 per month due to the fact that that they have been impacted during COVID19.

    I have not agreed to a price adjustment but I have offered the standard 3 months reduced rent where but on the basis that the difference will get repaid to me at the end of the lease. The tennant refused and would like to exit on the agreement as soon as possible.

    I am in no rush to address that matter as I do not want the tennant to move out and I intend to withhold the deposit at the end of the agreement to cover any shortfall. There is 6 months left on the lease which would mean I would be £15k out of pocket, however this is also the deposit amount. Is this a safe option in the eyes of the law if I have not released them from the contract?

    I do not want them to leave as I will struggle to find a new tennant in these market conditions. I would need to rent the property out again within 6 weeks to ensure I breakeven.

    Any advice on what my rights are and what I should do would be greatly appreciated.

    Cheers!
    Simon



    #2
    What does the contract that you have with the tenant say that the deposit can be used for?

    Comment


      #3
      Do you have an early exit clause? read it as it will tell you what you can ask the T for if they want to leave early.

      Comment


        #4
        The tenant doesn't have much negotiating room if there's 6 months left on the fixed term.

        Could they conceivably move out and move abroad to stop you chasing them for the rent they'd owe if they do a bunk?
        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
          Thanks everyone for the responses.

          Contractually the deposit can be used to offset any unpaid rent and there is not an early exit clause.
          I doubt very much that the tennant will move abroad and from my previous checks the tennant has assets based in the UK.

          My concern is that if I need to claim the rent back from the tennant (assume the tennant withholds the last few months rent) then a judge will not side in my favour due to circumstanses around COVID. I am not releasing them from the agreement and I am also not reducing the rent.

          Am I right to continue allowing the tennant to pay a reduced rent on the basis that we have not made an agreement?

          Comment


            #6
            That looks, on those figures to be an unlawful deposit amount, if so you might be better negotiating a mutually acceptable arrangement with the tenant.

            Comment


              #7
              Originally posted by Section20z View Post
              That looks, on those figures to be an unlawful deposit amount, if so you might be better negotiating a mutually acceptable arrangement with the tenant.
              Thanks for the comment. The reference was an approximate figure. The exact deposit is 6 weeks rent (£10,000 x 12 / 52 x 6) which comes to £13,846. What do you mean by unlawful?

              Thanks

              Comment


                #8
                Originally posted by sparky1970 View Post

                Thanks for the comment. The reference was an approximate figure. The exact deposit is 6 weeks rent (£10,000 x 12 / 52 x 6) which comes to £13,846. What do you mean by unlawful?

                Thanks
                Sorry, I meant £15000 would have been over the 6 week maximum but as long as you have it protected then you should be able to claim rent arrears from deposit.
                But don't expect any cooperation from DPS thieves.
                Personally I would be considering allowing a reduced rent in the current circumstances. Maybe go 50/50 with half deferred if he will agree in writing you can deduct deferment from deposit might save argument later.
                Just my first thoughts on face of it - you know tenant and circumstances better than me.....

                Comment


                  #9
                  Originally posted by sparky1970 View Post
                  Thanks for the comment. The reference was an approximate figure. The exact deposit is 6 weeks rent (£10,000 x 12 / 52 x 6) which comes to £13,846. What do you mean by unlawful?
                  When did the tenancy start?
                  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
                    No offence but there are only 2 n's in tenant: Being careful with paperwork seems wise with landlord/tenant mattters...
                    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


                      #11
                      Originally posted by Section20z View Post
                      That looks, on those figures to be an unlawful deposit amount, if so you might be better negotiating a mutually acceptable arrangement with the tenant.
                      As the rent is more that £100,000 a year, the tenancy is not an AST. So the deposit rules do not apply. The tenant has a contractual tenancy. So what can happen, is all in the contract.

                      Comment


                        #12
                        Originally posted by Mrs Mug View Post
                        As the rent is more that £100,000 a year, the tenancy is not an AST. So the deposit rules do not apply. The tenant has a contractual tenancy. So what can happen, is all in the contract.
                        Good point.
                        Not used to dealing with rents on this scale!
                        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
                          Originally posted by jpkeates View Post
                          When did the tenancy start?
                          It started in late December 2019.



                          Comment


                            #14
                            So should I leave it as is and allow the tenant (thank you for help with spelling) to continue paying a reduced rent despite the fact we are on different terms OR should I push for a resolution now on the basis the tenant may leave the contract early as they claim they can no longer afford it due to a change in circumstances? I understand the rules around this is that I could only claim for 2 months of missed rent and NOT the remainder of the contract in full if the tenant have moved out.

                            Thanks!

                            Comment


                              #15
                              You and the tenant have a contract and you are both obliged to honour it.

                              Whether you lower the rent or not is up to you and your situation and conscience, you're not obliged to just because someone asks you to.
                              If you don't agree to lower it, the rent stays as it is until at least the end of the fixed term of the agreement.

                              Given that I'm not used to dealing with people able to pay £120,000 per annum rent, it would be interesting to know what the tenant felt justified the reduction and why they are impacted but can still afford to pay the equivalent of £90,000 per annum.
                              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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