Holiday, AST and Advanced rent vs Deposit

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    Holiday, AST and Advanced rent vs Deposit

    First of all Merry Christmas and a very happy New Year to all of you!

    I am a LL who had a few issued with DPS, disputes and all the rest of the unpleasant bits you can imagine hence why I am now thinking of using the agreement with advanced rent rather than regular AST with deposit and in the circumstances of very short letting - Holiday AST.

    I was wondering whether any of you have experience with such agreements and how is it working for you? Also I would appreciate an advice with any templates if these agreements, especially the advanced rent one.

    Thank you in advance.

    #2
    Originally posted by JustLLs View Post
    I am now thinking of using the agreement with advanced rent rather than regular AST with deposit
    How would this arrangement be better than taking and protecting a deposit? You would be surely forced to go to court to recover the cost of any damage to your property?

    Or are you intending to also raise the rent to offset this?

    Comment


      #3
      I am not really sure how you are hoping to operate - but if you are thinking of a 6 months 'holiday let' instead of an 'AST' I suspect you will find that the tenant has an AST - whatever you write on the agreement. As such, it would have all the tenant protection that a usual AST gives.

      And - assuming therefore you end up granting an AST (whatever you call it) then there will be an obligation to protect any deposit.

      If you collect - say - 2 months rent at the start of the tenancy, and the 1st rent payment is 1 month after move in, then the extra month is a deposit. It doesn't matter what you call it - it would be regarded as a deposit in law.

      Comment


        #4
        I agree with the two posts above also there are different taxation rules for holiday lets, most holiday lets are assesed for business rates rather than CT and damages, repairs and wear and tear are accounted for differently, also restrictions on lengths of occupancy and total occupancy for the year.
        You may find that you will have to evict a perfectly good tenant because they are not allowed to occupy for more than a certain time.

        Personally I would concentrate on your vetting/referencing procedures and make sure that you yourself are running a tight business like ship.

        However if you are seriously tyhinking of going down the true holiday let route then a decent book on property rental should have information regarding holiday lets.

        Comment


          #5
          ...and take detailed legal advice; do not DiY.
          JEFFREY SHAW, solicitor [and Topic Expert], Nether Edge Law*
          1. Public advice is believed accurate, but I accept no legal responsibility except to direct-paying private clients.
          2. Telephone advice: see http://www.landlordzone.co.uk/forums/showthread.php?t=34638.
          3. For paid advice about conveyancing/leaseholds/L&T, contact me* and become a private client.
          4. *- Contact info: click on my name (blue-highlight link).

          Comment


            #6
            Thank you for the replyes.

            I agree holiday let does not sound too appealing; however, at times due to the fact that it is a some of the properties are rent on room by room basis I have Ts for 1-4 weeks, which is ridiculous to use DPS.

            Snorkerz with regards to the advanced rent, I am sure as long as that month’s rent is used as rent at the end of tenancy, but not as a deposit, it can not be treated as deposit. Further if this is confirmed in the agreement as well I do not see an issue.

            Comment


              #7
              Originally posted by JustLLs View Post
              I am sure as long as that month’s rent is used as rent at the end of tenancy, but not as a deposit, it can not be treated as deposit. Further if this is confirmed in the agreement as well I do not see an issue.
              Cool. The matter has been discussed on this forum several times. Consensus is, it's a deposit. However, if you disagree - that's your right. I know that if you manage to successfully issue a section 21 then there will be many people on this forum who will be interested as it may indeed be a way to avoid / sidestep the obligation to protect deposits.

              Comment


                #8
                Originally posted by JustLLs View Post
                I agree holiday let does not sound too appealing; however, at times due to the fact that it is a some of the properties are rent on room by room basis I have Ts for 1-4 weeks
                I still suspect you will end up granting ASTs - even if it says 'Hoilday Let' on the top of the agreement. It isn't defined by what you (and your tenants) agree - it is defined in the housing law.

                If it suits your purpose to clasify the properties as holiday lets, then the laws are different than for standar lets or HMOs. Here is a summary:

                https://www.alliance-leicestercommer...al_matters.asp

                Comment


                  #9
                  Just last question, lets say I will not be able to serve S21, luckily I did not have such need before and hope for it to stay same way. Will this mean that I am not liable for DPS? or T still has the right to claim 3X deposit?

                  Thank you

                  Comment


                    #10
                    IF the tenancy agreement is legally an AST and you are deemed to have taken a deposit, then you will need to protect the deposit.

                    If you don't, you leave yourself open to the 3x penalty and any s21 would be invalid.

                    Comment


                      #11
                      Originally posted by Snorkerz View Post
                      IF the tenancy agreement is legally an AST and you are deemed to have taken a deposit, then you will need to protect the deposit*.

                      If you don't, you leave yourself open to the 3x penalty and any s21 would be invalid.
                      *- or return deposit to T.
                      JEFFREY SHAW, solicitor [and Topic Expert], Nether Edge Law*
                      1. Public advice is believed accurate, but I accept no legal responsibility except to direct-paying private clients.
                      2. Telephone advice: see http://www.landlordzone.co.uk/forums/showthread.php?t=34638.
                      3. For paid advice about conveyancing/leaseholds/L&T, contact me* and become a private client.
                      4. *- Contact info: click on my name (blue-highlight link).

                      Comment


                        #12
                        Originally posted by JustLLs View Post
                        I am a LL who had a few issued with DPS, disputes and all the rest of the unpleasant bits you can imagine hence why I am now thinking of using the agreement with advanced rent rather than regular AST with deposit
                        with regards to the advanced rent, I am sure as long as that month’s rent is used as rent at the end of tenancy, but not as a deposit, it can not be treated as deposit. Further if this is confirmed in the agreement as well I do not see an issue.
                        You are putting forward two options - rent in advance v. deposit - as though they are alternative solutions to the same issue.

                        But if you take rent in advance, and it is not held as security against the tenant's liabilities or breach of tenancy condition, then what's the point as it provides no security?

                        And, as others have said, you are also possibly exposed to deposit non-compliance claims.

                        See http://nearlylegal.co.uk/blog/2009/0...eposit-honest/

                        Comment

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