Bargaining power/discount for paying rent up front?

martin1981

I haven't seen any other forum/website that covers this question, so thought I'd try here. We've just sold our house, which was passed down/inherited, and we've decided we're going to rent for 12 to 18 months before looking to buy a new place (we're young so I'm looking to get a rung or two up on the career ladder before applying for proper mortgage etc.).

Because of the house sale we're in the lucky position to be able to put up a large amount of cash. We're looking at larger (detached) properties with rent PCM around £1500 to £2000. We're hoping that we'll have some bargaining power by offering to pay 12 or 18 months of rent up front, at the time of moving in?

A few people I've asked have said we'll definitely be able to get a discount this way, but I haven't spoken to anybody who's actually done it, so we just wanted to get a general idea of what a reasonable price to ask for might be. I understand this is a pretty open-ended question, and depends on the landlords and all sorts of other factors! But it would be great to hear from anybody who's paid up front and rented for this sort of time period, so we can get an idea. E.g. if we were looking at a £2000 PCM house and asked to rent for 18 months paying in full, would it be ridiculous and unrealistic to offer to pay £1500 PCM for the whole period? Obviously you don't know until you ask, but we're just looking for some general advice at this point, it'll probably be about 2 months before we find a place. Thanks in advance.

marc-h_2

As a starting point you could work out what you would earn in interest if you left it in a bank account. Remembering that it would be decreasing each month. That probably wont be much though.

clutton_2

as a LL if my rent was £2000 and you offered £1500 - 25% reduction - i would think you were taking the mickey

increasingly high end properties which have rent paid in advance are being targeted by cannabis farmers.......

i am not suggesting you are !! but that a LL may treat your offer with less enthusiasm than you might expect

longtimelurker_2

Yup. We offered 20% below asking (not an as high-end rent though!) on condition of paying 6 months up front. When we moved in it emerged that the previous tenants had been in arrears, so no wonder the LL was so keen to get payment.

I know of some very high-end rental properties (£20,000 a month) that have been dropped to half their prices because they just aren't being let. Maybe see how long the place has been advertised for, as there may be more motivation for the LL to rent at a lower rate.

martin1981

clutton wrote: »

as a LL if my rent was £2000 and you offered £1500 - 25% reduction - i would think you were taking the mickey

increasingly high end properties which have rent paid in advance are being targeted by cannabis farmers.......

i am not suggesting you are !! but that a LL may treat your offer with less enthusiasm than you might expect

Thanks for this, I actually hadn't thought of that and found it quite amusing!

I think given we're a young couple with 3 year old daughter I'd be surprised if most landlords would suspect this... But it's a good point, now you've said this I will definitely make it clear to any potential landlord that we're able to put up the cash because of a sale of an inherited property (and provide proof if required), rather than drug money!

martin1981

longtimelurker wrote: »

Yup. We offered 20% below asking (not an as high-end rent though!) on condition of paying 6 months up front. When we moved in it emerged that the previous tenants had been in arrears, so no wonder the LL was so keen to get payment.

I know of some very high-end rental properties (£20,000 a month) that have been dropped to half their prices because they just aren't being let. Maybe see how long the place has been advertised for, as there may be more motivation for the LL to rent at a lower rate.

Thanks, it's great to hear from somebody who's tried this! I was just thinking it probably all depends one how much the landlord needs or wants cash at that particular time... I guess as we're looking at slightly more expensive places and looking to put up 12 or 18 months (or perhaps even 2 years), there may even be more to play with given the larger figures. And we can always wait around for a better deal, particularly as you say if the house hasn't been rented for a while.

ilovecheese

Just one thing to check! Make sure the property you rent has permission to be let. If you pay upfront and then the owner does not pay his mortage (and he does not have permission to let) your AST contract will not be recognised by the mortage lender. (I have read this on another forum so I think I am right! If anyone knows better feel free to correct me!!)

martin1981

ilovecheese wrote: »

Just one thing to check! Make sure the property you rent has permission to be let. If you pay upfront and then the owner does not pay his mortage (and he does not have permission to let) your AST contract will not be recognised by the mortage lender. (I have read this on another forum so I think I am right! If anyone knows better feel free to correct me!!)

Thanks for this, I wasn't aware of this issue at all so we'll definitely check before paying anything and moving in.

GarySt_2

Martin
As a landlord I wouldnt give much discount as its not going to earn me much in interest. I might though give a 'discount' if I was testing the market and asking too much in the first place but nothing like that amount.
Landlords that need the cash now might give you 5-10% discount but be wary. A landlord that is desperate for the cash is a landlord that wont spend the money if there are problems and could be the landlord that just has to sell.

clutton_2

i would be very loathe to give a total stranger £48,000 - think very hard before doing that...

as others have said if he goes belly up - can you afford to lose that much money ? as you sure as heck wont get it back if his Lender repossesses..

Having Permission to let is no more guarantee that a LL is paying his mortgage than if he does not have permission to let.....

martin1981

clutton wrote: »

i would be very loathe to give a total stranger £48,000 - think very hard before doing that...

as others have said if he goes belly up - can you afford to lose that much money ? as you sure as heck wont get it back if his Lender repossesses..

Having Permission to let is no more guarantee that a LL is paying his mortgage than if he does not have permission to let.....

Hi, thanks for the warning, no of course we couldn't afford to lose that much money. I'm only just starting to look into these issues, as I said it will be at least 2 months before we're moving (and may stay somewhere else in the interim before we find our ideal place).

I'm going to look into all the details, but if it's done through an estate agent and there is an AST agreement in place there must be some way to get a guarantee? Perhaps having a specific clause to protect use written in which ensures if the house did get repossessed then we could get back the remaining rent which had been paid in advance? Perhaps I'm being naive because we're not experienced at renting, but I don't see how tenants could be completely unprotected?