Rent and standing orders - what are the rules?

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    Rent and standing orders - what are the rules?

    As a landlord of several properties I ask my tenants to set up standing orders for rent payments.

    Some are good about this, but others haven't, and are frequently late with the rent. They claim disorganisation as the reason, not hardship.

    Is there any way to make them set up a standing order? I have explained that there's no risk because they have control over the payments (unlike a direct debit), but still, no joy.

    When taking on new tenants, are you allowed to refuse to hand over keys until the standing order has been set up? If not, what CAN you do? Obviously I don't intend to break the law in any way. But it's very frustrating having the same conversation with my tenants every month, with no headway, and I'd like to improve things when these tenancies expire.

    #2
    Many letting agents make tenants sign a standing order (or direct debit)when they sign the contract usually on the tenancy commencement date. The agent then sends the S/O off to the bank for payment from month 2 onwards. May be worth a chat with your bank to ensure there is no reason why you cannot do the same.

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      #3
      What does it say in the tenancy agreement?? e.g. if it states something like...
      The rent is Ā£ xxx per calendar month payable monthly (in advance). The first payment will be paid at start date or before and subsequent payments are due and must be paid on or before the same date of each calendar month thereafter. Payment to be made direct into Mr artfullodger's Bank Account, hhhhhhhh Building Society, Sort code 12-34-56, Account number 78901234, by Standing Order to arrive in this account by the due date.
      then that's clear... if tenancy agreement is silent or says "pay landlord some time within 6 months of rent being due in cash, cheque or bankers draft" then nope...

      what do your tenancy agreements say on the subject??
      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...

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        #4
        You can make up your own standing order form with your bank details etc already completed.

        Once the tenant agrees to the tenancy(have the part about the payment method in the tenancy agreement) you get them to fill in their bank details before any keys are handed over, and tenancy agreements signed.
        Allow tenants to protect their own deposits. I want free money when they do it wrong

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          #5
          In days gone by, a tenant would have to organise a standing order for a number of days before rent day in orde for it to arrive in the landlords bank account in time. If pay-day is the day before rent-day then that is a problem.

          Now, with 'faster payments' it's a thing of the past for most banks, but your tenants may not be aware of that.

          If tenants are on email, you could set up a monthly reminder a couple of days before rent day.

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            #6
            Currently the tenancy agreements state clearly what date the rent has to clear by but don't state the method of payment.

            So if you collect their details on a form, you then just send it off to the tenant's bank and they'll automatically put it in place? Or you send it to your own bank and they sort it out with the tenant's bank? Could look at doing that.

            As for my first idea (asking tenants to set up their own standing order, and asking for proof of it before handing over keys) - is that doable? A landlord friend told me it was illegal but didn't say why. To me it seems a better method on two fronts... the tenant has control over the process so doesn't worry they're authorising anything shady, and there's less paper admin for me as a landlord.

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              #7
              You send the form to the tenants bank.
              Obviously they pay the rent for the 1st month in cash/cleared funds, and the standing order is set up for the 2nd month.

              Doing it your way isn't illegal, but time consuming and harder to manage.
              Allow tenants to protect their own deposits. I want free money when they do it wrong

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                #8
                Perfectly doable - but nothing to stop the tenant phoning the bank and cancelling it even before the first payment. There is a 'standing order' form in the documents section of this site (you may need to re-register)

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                  #9
                  Originally posted by Snorkerz View Post
                  Perfectly doable - but nothing to stop the tenant phoning the bank and cancelling it even before the first payment.
                  Indeed. My new tenants complete a standing order form which I personally send to their bank - there's really no more you can do than that to cover yourself; but yes, the tenant can still cancel it on a whim if they choose to.

                  Mind you, my most recent new tenant I had move in phoned me up on the day the first s/o payment was due, in a bit of a state because no s/o was apparently set up, and was everything OK? I had personally handed in the form over the counter at her bank some weeks previously, so obviously they'd lost it (no reason to doubt the tenant's story, either, as she then went on and set up the s/o herself online, and it was paid that day)

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                    #10
                    Originally posted by synesthesiac View Post
                    Currently the tenancy agreements state clearly what date the rent has to clear by but don't state the method of payment.

                    ......
                    So in that case how they pay (cash, cheque, ST, bank xfer..) is entirely up to them and you cannot insist on SO...: Suggest you re-write that clause and a calm, polite but firm letter to tenants reminding them (next time..) of when the money must arrive in your account. Time after that it's late serve S8 ground 10&11 notice re late payment.. might prompt them to see sense, but is most likely to put their backs up...

                    Cheers!!
                    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...

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                      #11
                      If you specify a method of payment just be sure to add, "or by such other method as and/or to such other account as the landlord may notify the tenant from time to time". Otherwise you're stuck with your tenant paying to your original account if you change banks.
                      Disclaimer:

                      The above represents my own opinion, derived from personal knowledge and should not be relied upon as definitive or accurate advice. It is offered free of charge and may contain errors or omissions or be an inaccurate opinion of the law. I accept no liability for any loss or damage suffered as a result of relying on the above.

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