Rent in advance question

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  • Lawcruncher
    replied
    There is a fine line between finding a loophole and being too clever for your own good. If you are trying to get round a statute assume that the court will do its best to find that you are too clever for your own good.

    The big risk with the "last month's rent" proposal is that it is found to be a deposit which leads you into penalty territory for failure to protect it. Another possible snag is, as jpk suggests, what happens if the tenancy is brought to an end early. Should the landlord refund it? Can the landlord take it to cover rent in arrears? If so, it looks like it was a deposit after all? If the landlord can keep the rent does it mean that the tenant is entitled to occupation for the period to which it relates? Too many uncertainties.

    Keep to the golden rule:

    KEEP THINGS SIMPLE

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  • jpkeates
    replied
    KTC I agree in general, but rent in advance is different than a deposit in that the latter has a prescribed process, unlike rent.
    The landlord can do what they want with rent money, and would, as you say, have probably need to agree what would happen to it in the event of an early surrender.

    Deposits have things that must happen and deadlines for when they must happen and limits on their value.
    All of which means that "security" is carrying a lot of weight.

    And I think there are policy reasons why the practice, which is simply a way of increasing the value of a deposit held by a landlord, should guide a court's interpretation.
    Although that would be a change to the status quo.

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  • KTC
    replied
    Originally posted by jpkeates View Post
    Even absent a break clause any tenancy can be ended by surrender or mutual agreement.
    Sure, but in that case it wouldn't be any different to say someone paying 3 or 6 months in advance at a time and then a surrender is agreed after a month or two. What happens then to the prepaid rent for a tenancy period that is not now happening would be up to the parties to agree, or in the case of a tenant notice to quit whether there's an explicit obligation in the tenancy agreement for landlord to repay it.

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  • jpkeates
    replied
    Originally posted by KTC View Post
    If it's a fixed term tenancy that's at least as long, and the landlord does not have a break option, I don't see a problem.
    I just have an underlying concern about the tenancy ending early.
    Even absent a break clause any tenancy can be ended by surrender or mutual agreement.

    But the rent for month x does pass the test in the case law of the tenant knowing the rent was paid.

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  • KTC
    replied
    Originally posted by jpkeates View Post
    ?
    If you take rent in advance for the first and (say) the twelfth month of a tenancy, that's possibly OK, because advance payment of rent is allowed. But there are going to be complications, because it's always possible that the 12th month of a 12 month tenancy may not happen
    If it's a fixed term tenancy that's at least as long, and the landlord does not have a break option, I don't see a problem.

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  • jpkeates
    replied
    Originally posted by Zippy01 View Post
    ]I saw this on shelter site, but can't say I have ever heard of it. Worth doing
    ?
    I can't believe Shelter support this.

    Some landlords ask for rent in advance to cover rent both at the start and end of your tenancy.Example Your tenancy starts on 1 January. Your monthly rent is £700.
    You pay £1400 rent in advance.
    Your contract states that £700 is for the first month of your tenancy and £700 is for the final month.
    Your next payment of £700 is due on 1 February.
    You won't have to pay any rent in the final month of your tenancy because you've already paid it in advance.
    Landlords can't take rent in advance for the first and last month's of a tenancy, because it's not certain when the last month of a tenancy is going to be, so the advance payment for that last month is a deposit.

    If you take rent in advance for the first and (say) the twelfth month of a tenancy, that's possibly OK, because advance payment of rent is allowed. But there are going to be complications, because it's always possible that the 12th month of a 12 month tenancy may not happen for some reason, and if you get the wrong judge, they could still view that payment as a deposit.

    Or the other option, can you ask two or 3 month in advance, but the next payment due after the first month, (I think this has been classed as taking a deposit in some cases?
    That would be taking a deposit, not just in some cases.
    It would be more than the maximum deposit allowed and you'd never be able to protect it properly.



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  • theartfullodger
    replied
    Let's clear a basic item 1st. If the tenancy does not specify if rent is paid in advance, then it's paid in arrears...
    https://england.shelter.org.uk/legal...ment_of_rent#0
    Payment in arrears or advance?

    Rent is payable in arrears, unless specified otherwise in the tenancy agreement. In practice most tenancy agreements set out that rent is to be paid in advance. Rent is payable for the same intervals as the periods of the tenancy, for example weekly or monthly for a weekly or monthly periodic tenancy respectively. For the purposes of calculating the correct notice period to end a tenancy, note that the day on which rent is payable does not necessarily coincide with the start day of a period of the tenancy.
    However, you are asking about more than that. Oddly Mssrs Shelter state at

    https://england.shelter.org.uk/legal...p_with_costs#0
    Rent in advance

    Most private landlords require rent to be paid in advance (ie before it is due) before the tenant can move in. Landlords will vary as to how much rent in advance (if any) they will demand of a prospective occupier. Landlords are free to ask for any amount.
    But I'd be very ( VERY ) wary of asking for more than 1 month in advance, lest - depending on exact wording of tenancy agreement & any other paperwork eg receipts - it was classified by a court as a "deposit" and therefore the 3 x deposit penalty issue & s21 being invalid if "deposit" - which might include all or part of rent in advance - was not protected.

    See also
    https://landlordlawblog.co.uk/2012/0...e-asks-tenant/

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  • Zippy01
    replied
    Yeah I guess, but at least it gives one more month's money whilst trying to evict and the max deposit can be taken as well.

    I never understood the deposit cap, if set too high you won't get a tenant, and well it's their choice if they do want to pay. Plus it is protected so not automatically ours anyway?

    Originally posted by Berlingogirl View Post
    They will be getting a S21, S8 and the start of a money claim. I'm not bothered - they can go and find somewhere else. But good luck with that. I've got people stacking up looking for a nice 3 bed bungalow with gardens and a garage and woods to the rear. I'm more than a little p**d off with entitled tenants who think just because they're tenants I've given them a blank cheque!
    Yes agree, the best attitude is not to be bothered, what will happen will happen anyway and we know it's all stacked against us if thing turn bad. It's not having problems getting a new tanant, but it's the amount of time taken to get the dodgy ones out, then the anxiety of what the new one(s) will be like! I guess we just have to accept occasional losses just like anything else that doesn't go to plan and try not to let it get to you. Any 'business' has times like these. But, the constant reg changes and Landlord bashing is crazy though, but the govenment is using us to subsidise their social housing spend.

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  • Berlingogirl
    replied
    I don't think it's worth doing. If a tenant isn't going to pay the last month's rent with the intention that you take it out of the deposit, then they're just not going to pay it.

    If you've any doubt the tenant isn't going to pay, then don't let to them. I know you can't always tell.

    You're not the only LL who's fed up with the small amount of deposit.

    I used to charge a lowish rent for a property (£450 pcm) but due to the landlord bashing which has increased over the years, reduction in deposits, longer S21s, etc., I've increased my rents, as properties change tenants, to the maximum I think I can get. In this case I've just let it at £550 pcm, but nearby properties are £595 and £625 and they're not even as nice as mine!

    I've just had a tenant pay short rent this month. They called in a repair man without asking me first for a job that could have been done for free. I'm not agreeing to pay the bill so they threatened to take it out of the rent. They will be getting a S21, S8 and the start of a money claim. I'm not bothered - they can go and find somewhere else. But good luck with that. I've got people stacking up looking for a nice 3 bed bungalow with gardens and a garage and woods to the rear. I'm more than a little p**d off with entitled tenants who think just because they're tenants I've given them a blank cheque!

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  • Zippy01
    started a topic Rent in advance question

    Rent in advance question

    I saw this on shelter site, but can't say I have ever heard of it. Worth doing?


    Some landlords ask for rent in advance to cover rent both at the start and end of your tenancy.Example Your tenancy starts on 1 January. Your monthly rent is £700.
    You pay £1400 rent in advance.
    Your contract states that £700 is for the first month of your tenancy and £700 is for the final month.
    Your next payment of £700 is due on 1 February.
    You won't have to pay any rent in the final month of your tenancy because you've already paid it in advance.


    Or the other option, can you ask two or 3 motnth in advance, but the next payment due after the first month, (I think this has been classed as taking a deposit in some cases?

    Only I am sick of being limited in taking a deposit so small that it rerely covers anything if the tenant defaults on payemnts.





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