Advanced rent has now become a deposit

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    Advanced rent has now become a deposit

    We have received a letter from LA that the LL will not let us use our 2 mths advanced rent for the final 2 months. We have handed our notice in and expected to use the advanced rent to cover the final two months to enable us to increase our cash flow to secure our next property.

    This advanced rent was a security for the LL against non payment of rent. We pay our rent normally a month in advance and this was an extra security held by the agent.

    We verbally handed our notice in and said it was our intention to use the advanced rent against the final two months, therefore leaving nothing owing when we leave. In response they have come back and said the LL has insisted the advance rent changes status and has now become a deposit. They have lodged it with the TDS this week together with our original £1100 holding deposit for damages etc.

    Can they do this? They have treated it as advance rent since Sept 09 and now that we've handed our notice in (by letter this week) they've changed the status and moved our money to the TDS??

    Your help would be much appreciated

    R & L

    #2
    Just seen you have also paid a deposit.

    What do you have by means of statement about the deposit that needs to be paid?

    Obviously, do not pay any further rent.
    Allow tenants to protect their own deposits. I want free money when they do it wrong

    Comment


      #3
      Sounds like initially he tried to get round the deposit protection claiming it's advanced rent, and then have taken some advise saying it could be classes as a deposit, and therefore needed protected.

      That why I try not to take more than a month advance rent, but still I am not 100% sure what the differance is legally, as it still a liability against non payment.

      Well you could not pay the rent for the next 2 months, except for a little hassle from the LL he can't do much. But I would only do this if you sure about the orginal agreement, and you got your referances for your next place sorted out.
      Disclaimer: What I say is either right or wrong. It may be advisable to check what I say with a solicitor. If he says I am right then I am right, unless he is wrong in which case I am wrong; but if he says I am wrong then I am wrong, unless he is wrong in which case I am right

      Comment


        #4
        Sounds like your LL used the description of what is in effect a deposit as being 'advanced rent' as a way round having to register what is in effect a deposit !
        Since he's called it advanced rent then I don't see how he can expect you to pay another two months rent when your leaving in two months.

        Comment


          #5
          Originally posted by BassetHoundMadness View Post
          This advanced rent was a security for the LL against non payment of rent. We pay our rent normally a month in advance and this was an extra security held by the agent
          ....the LL has insisted the advance rent changes status and has now become a deposit. They have lodged it with the TDS this week together with our original £1100 holding deposit for damages etc.
          So, when you moved in you paid: 1) a month's rent in advance, 2) an additional two months' rent in advance as 'security', 3) a deposit?

          What does it say in the tenancy agreement about 2) and 3)?

          Unless the tenancy agreement is very specific about the additional two months' rent being advance payment of the last two months' rent, then it *is* a deposit (i.e. money held as security against T's obligations in the contract) and it is correct to protect it. And you should pay rent as normal.

          However...

          Originally posted by BassetHoundMadness View Post
          They have lodged it with the TDS this week together with our original £1100 holding deposit for damages etc.

          Can they do this? They have treated it as advance rent since Sept 09 and now that we've handed our notice in (by letter this week) they've changed the status and moved our money to the TDS??
          By TDS do you mean http://www.thedisputeservice.co.uk/ ? Because the TDS do not allow late protection (i.e. more than 14 days after receipt of deposit), and require clauses to be inserted into the tenancy agreement in order for the protection to be valid.

          Comment


            #6
            Originally posted by westminster View Post
            Because the TDS do not allow late protection (i.e. more than 14 days after receipt of deposit), and require clauses to be inserted into the tenancy agreement in order for the protection to be valid.
            Therefore you could contemplate a claim, or at least threaten one, for non-compliance with s213(5)(b) of the 2004 Housing Act.

            Comment


              #7
              Yes it is with the TDS? Do you think we have a case?

              After 6 months of living at the property, having paid 6 months in advance + £1100 deposit initially. We changed to a periodic tenancy and signed an appendum quoting

              We agree to pay in addition to the monthly rent, a further £1800 at the time of signing this appendum. This additional deposit represents 2 months advance rent and is to be held by the agent in favour of the landlord as a security against any rent arrears and in addition to the existing deposit held.

              Comment


                #8
                Originally posted by BassetHoundMadness View Post

                We agree to pay in addition to the monthly rent, a further £1800 at the time of signing this appendum. This additional deposit represents 2 months advance rent and is to be held by the agent in favour of the landlord as a security against any rent arrears and in addition to the existing deposit held.
                You should have simply paid the rent in advance which the letting agent would have then forwarded to the landlord.

                It isn't necessarily the landlord trying to pull a fast one, but the wording of the payment can be interpreted as it being a deposit.
                Allow tenants to protect their own deposits. I want free money when they do it wrong

                Comment


                  #9
                  Originally posted by thesaint View Post
                  You should have simply paid the rent in advance which the letting agent would have then forwarded to the landlord.

                  It isn't necessarily the landlord trying to pull a fast one, but the wording of the payment can be interpreted as it being a deposit.
                  We have sent a letter

                  Thank you for your letter of 15th August 2010 and for confirmation that the money in question was given as advance rent. We do not consent to it being held as a deposit, and would remind you that while no rent is owing the money is indisputably ours.

                  As notice has now been given, we would instruct that this money is to be used as rent for the remaining term of the tenancy that being £605.00 paying up until 27th September 2010 our vacating date. The surplus £1195 must be returned in full without any deductions at the conclusion of the tenancy, otherwise we shall initiate proceedings to recover it without further notice. Please advise Mr & Mrs ***** accordingly.

                  Comment


                    #10
                    Originally posted by BassetHoundMadness View Post
                    After 6 months of living at the property, having paid 6 months in advance + £1100 deposit initially. We changed to a periodic tenancy and signed an appendum...
                    I don't know why you agreed to this, and paying yet more money in advance/deposit - a periodic tenancy arises automatically when the fixed term expires; there is no need for a written contract (the terms of the original remain in place except for those relating to notice), nor do you have any obligation to sign one, or pay further monies.

                    Originally posted by BassetHoundMadness View Post
                    We have sent a letter

                    Thank you for your letter of 15th August 2010 and for confirmation that the money in question was given as advance rent. We do not consent to it being held as a deposit...
                    But you signed the addendum stating:

                    We agree to pay in addition to the monthly rent, a further £1800 at the time of signing this appendum. This additional deposit represents 2 months advance rent and is to be held by the agent in favour of the landlord as a security against any rent arrears and in addition to the existing deposit held.
                    So IMO you've paid £1,100 (originally) + £1,800 (subsequently) as deposit. Of course, in the end, if you don't pay any further rent due, then the money will be set against the arrears at the end of the tenancy next month.

                    The matter of whether the whole amount of the deposit has been properly protected is separate; I do not know whether your original tenancy agreement includes the TDS' required clauses, or whether this is sufficient to cover the subsequent extra deposit payment - you'd have to call the TDS and ask.

                    But, obviously, you can't argue the £1,800 isn't a deposit and at the same time complain that it isn't protected.

                    Comment


                      #11
                      Reply from Letting Agent

                      Thank you for your letter of notice and the additional letter of the 17th August instructing that these
                      monies must be used towards the rent due in the coming months.
                      As advised the landlord has not agreed to this, therefore as explained the status defaults to deposit
                      and as stakeholder, as declared in your tenancy agreement, we require a joint decision to act as
                      requested.
                      I advise that you should take legal advise from a solicitor or CAB should you wish to insist on your
                      request.


                      I guess we have to decide whether to accept that it's a deposit and pursue them on the non protected status. Any advice either way would be good.

                      Comment


                        #12
                        Originally posted by westminster View Post
                        I don't know why you agreed to this, and paying yet more money in advance/deposit - a periodic tenancy arises automatically when the fixed term expires; there is no need for a written contract (the terms of the original remain in place except for those relating to notice), nor do you have any obligation to sign one, or pay further monies.

                        If we'd known then what we've learnt now we would have stood up for ourselves. The LA had issued a notice for possession so if we didn't sign and pay we had 4 weeks to get out and nowhere to liveBut you signed the addendum stating:



                        So IMO you've paid £1,100 (originally) + £1,800 (subsequently) as deposit. Of course, in the end, if you don't pay any further rent due, then the money will be set against the arrears at the end of the tenancy next month.

                        The matter of whether the whole amount of the deposit has been properly protected is separate; I do not know whether your original tenancy agreement includes the TDS' required clauses, or whether this is sufficient to cover the subsequent extra deposit payment - you'd have to call the TDS and ask.

                        I called them they don't think it's been handled properly but without all the facts wouldn't make a decision they have also said they can only get involved once we moved out.

                        But, obviously, you can't argue the £1,800 isn't a deposit and at the same time complain that it isn't protected.
                        I agree not sure which avenue we should go down! Perhaps I should see a solicitor and see if the case is strong enough.

                        Thank you for your time & comments

                        R & L

                        Comment


                          #13
                          Originally posted by BassetHoundMadness View Post
                          I agree not sure which avenue we should go down! Perhaps I should see a solicitor and see if the case is strong enough.

                          Thank you for your time & comments

                          R & L
                          I would write and tell them that the money was paid as rent.
                          K.I.S.S.

                          A Solicitor is going to cost money. You have paid your rent, let the agent/landlord decide what they are going to do.
                          Allow tenants to protect their own deposits. I want free money when they do it wrong

                          Comment


                            #14
                            Originally posted by BassetHoundMadness View Post
                            If we'd known then what we've learnt now we would have stood up for ourselves. The LA had issued a notice for possession so if we didn't sign and pay we had 4 weeks to get out and nowhere to live
                            You mean the LA served a s.21 notice saying LL required possession after 2 months? If so, this is not a 'notice for possession', it merely entitles the LL to apply to the court for a possession order after the s.21 notice expires - many LLs will serve the notice as a matter of standard procedure towards the end of the fixed term, with no specific intention of going on to apply for possession.

                            In short, you wouldn't have had only four weeks to get out - you'd have had firstly two months' notice, then around a couple of months after that for processing of the court application for possession - then, if you still didn't leave, it'd take another month for a bailiff to actually enforce the possession order.

                            Comment


                              #15
                              Originally posted by BassetHoundMadness View Post
                              I agree not sure which avenue we should go down! Perhaps I should see a solicitor and see if the case is strong enough.
                              I think you need to face the fact that you did sign an agreement clearly stating that the additional £1,800 was a deposit to be held as security against arrears.

                              It seems to me rather opportunistic to insist otherwise, then effectively say you might change your mind if you find you have a 'strong enough' case to claim for non-compliance with deposit protection.

                              Comment

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