Rent Account query

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    Rent Account query

    In a situation where a tenant has rent arrears, am I justified in allocating part of a payment they make to pay off what is owed towards council tax and utility bills, or do I have to regard everything paid as being rent (these payments were not specified as being just rent, or rent and bills).

    It makes a big difference to rent arrears and therefore whether I can issue a section 8 notice now or in 3 weeks time.

    Also, is it justifiable to expect the council tax to be paid in advance, as is the case with the rent( I always ask for them to be paid together), or should it be added at the end of the monthly period when the utility bills become due?

    Why are they paying you money for council tax and utility bills?
    Allow tenants to protect their own deposits. I want free money when they do it wrong


      it's an HMO, 3 rooms let, and the way I've always done it.

      It can't be that rare because the 2nd of the tenants obligations in the AST states "to pay a reasonable and proportionate contribution (according to use) of all charges for gas and electricity, Council tax etc etc.."


        How does it work?
        They pay their rent and, in addition, you send them monthly bills for council tax and utilities?


          They pay their rent in advance together with the council tax.
          I calculate the utility bills, send them out mid-month and they should be paid together with the next rent payment, so the first payment towards utility bills is actually 2 months into the tenancy.
          In future, I'll include the council tax in the rent, but I'd like to keep the bills according to usage to avoid wastage.


            OK, so if each month they ought to make you a payment to cover 3 different bills (rent, CT, utilities) my understanding is that, unless they specifically tell you how to allocate their payments, you are free to do the allocation as you please.

            That means that you should indeed be able to allocate to CT and utilities first in order to maximise the rent overdue.


              Thanks jjlandlord!. Unfortunately, I have another ongoing section 8 action, and I'm between the initial hearing and the adjourned one, where the tenant will make counterclaim. In her case, I allocated everything to the rent unless it was obviously in excess of the rent. I thought this might avoid a potential argument in court, and because she owed so much it was still well in excess of the 2 months, but it would now be in my interest to have the rent arrears maximised, if I'm justified in doing so.

              Do you think it's too late to also rewrite her rent account according to your advice?

              It does seem fair that a landlord has the right to use payments to pay off his out-of-pocket expenses as a priority.


                I don't know but I suspect that you cannot change the allocation of funds once you have made it, especially if, as here, you realised statements.


                  Point taken.
                  Going back to the more recent one, I've been looking through e-mails and unfortunately when she made the 2 payments which corresponded with the amount of rent and council tax, she referred to them loosely as rent, as in 'paid the rent'. I don't know if that means I can't allocate anything to bills?

                  I don't want my section 8 action to fail on a technicality of rent arrears arguably being below 2 months rent when the notice was issued.


                    How is each TA worded
                    Rent £x / month inc C Tax plus utility bills based on usage?
                    Rent £x / month + C Tax of £y/month + utility bills based on usage?
                    Hope you are not re-selling utility units at above Co unit price and overcharging for C Tax, otherwise you may get your own rent-free accom in one of HMs' apartments'.

                    Rent should be stated as £x/wk or cal month and whetther that inc C Tax IMO
                    What amount do you declare as rental income to HMRC?
                    Do you claim C Tax and utility charges as allowable expenses?


                      On the table part of the 'house sharing' AST there is only room to put the net rent - '£X per month payable in advance on the Xth day of every month'. There is no actual space to mention council tax.
                      Then, later on in the agreement, the 2nd of the tenants obligations in the AST states "to pay a reasonable and proportionate contribution (according to use) of all charges for gas and electricity, Council tax etc etc.." at the end of the agreement I've hand written the amount of rent per month together with the amount of council tax both per month and per week.

                      and no I'm not reselling units at a profit!. I always name the company and tariff used, so tenants can check on that. And as far as council tax is concerned, I actually undercharge at the moment.

                      I note what you say about the rent being stated as including or excluding council tax. In the future I will include it with the rent, but in this case there is obviously still a liability to pay it along with the other bills. The question seems to be whether I'm justified in asking for it to be paid in advance. I would argue this is justifiable on the basis that the other bills are paid up to a month late (for instance the first months bills would not be paid until the tenant pays their 3rd rent, 2 months into the tenancy.
                      Regarding the tax, I just add up the total amount received, and deduct C tax, utility bills, etc.


                        Does anyone have any thoughts on the main point here, which is whether I can allocate money paid towards council tax and household bills, and the remainder towards rent, if it has been referred to loosely in e-mails as 'rent'?

                        If I can, it means I can issue a section 8 notice now, as opposed to in 2 1/2 weeks, (assuming that it could fail if the tenant could argue they had less than 2 months rent arrears at the time of the notice)


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