Post Dated Cheques

[minor_op]

My son has been asked to provide all 4 quarterly post-dated cheques for next years rent on a house he and some friends wish to rent as students. The Letting agency says all their landlords require this and will not accept standing orders or direct debits or BACS arrangements. Our bank advise against post-dated cheques as the date has no security and the cheque can be cashed at any time.
I am already signed up a guarantor.
Is this standard practice?

A dad

[jjlandlord]

The Letting agency says all their landlords require this and will not accept standing orders or direct debits or BACS arrangements.

This sounds quite strange.
I do not know what the intention is as that would not even bring them any assurance that payment would clear.

[minor_op]

Precisely and meanwhile there is £4000 worth of cheques that could be stolen and cashed at any time.
The letting agency is not willing to budge on this yet I am advised by the bank not to write post dated cheques and my sone likes the house.....

[thesaint]

Precisely and meanwhile there is £4000 worth of cheques that could be stolen and cashed at any time.
The letting agency is not willing to budge on this yet I am advised by the bank not to write post dated cheques and my sone likes the house.....

If they can be cashed at anytime, why don't you pay the rent in advance?

The agency can stipulate any conditions of payment they choose, either agree, negotiate or walk away.

[minor_op]

Its about trust I suppose isn't it.
The only leverage over a landlord is the next rent payment, and clearly the landlord expects students not to pay their rent. Not sure I could afford all next years rent in one go either.
Odd the rental game, cannot think of any other contractual situation where there is such a lack of trust between parties.

[jjlandlord]

Well, you could write the cheques, then cancel the later 3 immediately (your bank would charge you about £10 per cheque). Then when quarterly rent is due send a new cheque (only one!) to LA two weeks in advance saying that unfortunately the whole chequebook was cancelled because it was stolen.
Not exactly the kind of relation one would like to have with LA/LL but if your son really wants the house and you don't want to have 3 cheques in the wild that's the only 'solution' I can think of...

[Tess]

It was common when I was a student and still seems to be- I work in a completely different place now and still see it.
Student landlords I think see it as a gesture of goodwill as well as a certain amount of security - after all students do not have a job and guarantees are unenforcable unless in a very specific format. It's common for the dates to co-incide with the loan so that the landlord effectively gets 'first dibs' before it is spent elsewhere, and monthly S/Os are seen as more risky because of youth/lack of budgeting skills/can be cancelled with out penalty

Using installment dates often means students are living in the property for a month or more until the first installment goes through (mid october) which is, i guess, why students are seen as 'high risk high reward'.

[thesaint]

Well, you could write the cheques, then cancel the later 3 immediately (your bank would charge you about £10 per cheque). Then when quarterly rent is due send a new cheque (only one!) to LA two weeks in advance saying that unfortunately the whole chequebook was cancelled because it was stolen.
Not exactly the kind of relation one would like to have with LA/LL but if your son really wants the house and you don't want to have 3 cheques in the wild that's the only 'solution' I can think of...

Do you do this when they want the other 2 cheques at the same time, and repeat the process?

I hope anyone taking this advice ends up in court.

[jjlandlord]

..and hope you don't end up in court as a result.

As I said this is a last resort, but would not expose to any such risk.

[mind the gap]

My son has been asked for postdated cheques too, which seems like a daft requirement to me.

First, there is nothing to stop the person issuing the cheques, from cancelling them all before they are presented.

Second, I disagree that postdated cheques can be cashed at any time. If a bank cashes a postdated cheque early, they are breaking their own code of conduct since they should not cash in a not-yet-valid cheque.

Third, given that chques are (supposedly) on their way out, it would seem sensible to move to a more effcient method of paying a large amount of money over - like online banking/electronic payments.

In the end, unless a LL can persuade/require a tenant (student or otherwise) to pay the full rent up front, he has no guarantee that it will be paid as it becomes due, whatever cunning method he tries to pretend to himself is 'foolproof'. The best hope he has is referencing his tenants carefully and asking them to set up standing orders for set amounts on set dates, in advance. There is nothing to stop the tenant cancelling those s/os, but it's better than relying on the student's memory, which is the other option. The good news is that most student tenants have guarantors and defaulting amonst students is apparently less common than in the renting population as a whole.

[Ericthelobster]

My son has been asked for postdated cheques too, which seems like a daft requirement to me.

My student daughter has had to pay her rent for the whole year like that too. I was very unhappy about it but was advised (by her) that it was common practice, and in the (usually) seller's market that is student housing, it was clear that if she didn't play ball she wouldn't get the house (and since none of her friends were concerned about it, that would also mean she'd be left out in the cold). So - no contest.

That said, so far all has gone well - landlord seems fine and in fact has spent a fair amount on upgrading the place since they moved in.

Second, I disagree that postdated cheques can be cashed at any time. If a bank cashes a postdated cheque early, they are breaking their own code of conduct since they should not cash in a not-yet-valid cheque.

I've heard that these days the vast majority of cheques get cleared completely automatically with barely a glance at what's written on them other than the amount. Would be interested to know what would happen if someone complained about them clearing a post-dated cheque.... wouldn't be surprised if they said the customer was breaking the T&Cs by post-dating in the first place!

[jta]

It can happen elsewhere too. I once bought several thousand pounds worth of car batteries on a have now pay in March deal which needed a post dated cheque. Of course they cashed it there and then leaving me with a sizeable (unauthorised) overdraft.

[quarterday]

It is quite common for tenants to lodge a bunch of post dated cheques and for the landlord or managing agent to present them as they dates roll by as an alternative to prepayment of a quarter's rent. The practice at my firm is to require as a term of all leases that rents are paid by standing order mandate but one does not turn away cheques if tendered as an alternative!

[Ericthelobster]

It can happen elsewhere too. I once bought several thousand pounds worth of car batteries on a have now pay in March deal which needed a post dated cheque. Of course they cashed it there and then leaving me with a sizeable (unauthorised) overdraft.

So did you have a discussion with the bank about why they had cashed it?

[jjlandlord]

Looking further there might be one advantage in requesting post-dated cheques: http://lawscape.co.uk/articles/cheque-rule

Basically if the cheque bounces the creditor may sue the debtor, not in relation to the money owed (as LL would due for unpaid rent), but specifically on the fact that the cheque was dishonoured.
Apparently there is basically no defence and therefore a summary judgement may be applied.

Therefore suing should be easier and judgement quicker.