Advance Rent or Deposit?? Letting Agent from Hell!

tbs624

whatdowedonext - you may wish to refer your LA to this advice from the Residential LL Association or you may wish to use it as a starting point for a meaningful discussion with the Tenancy Relations Officer (TRO) at the local Council's private sector rentals office.

"Rent in Advance
When the tenancy deposit scheme was introduced, we advised members to consider taking rent in advance as an alternative. Communities and Local Government’s “Frequently Asked Questions” indicate that advance payment of rent is outside the statutory tenancy deposit scheme. We have previously issued advice to members to ensure that advance payment of rent is properly described as such and documented. However, it has now come to our attention that the Courts are beginning to carefully scrutinise advance payments of rent and that judges may treat it as a disguised deposit which ought to be dealt with under one of the statutory tenancy deposit schemes. This could mean that you could have to pay three times the amount penalty if you have taken advance rent, and not protected it under one of the statutory schemes should the Court decide to treat it is a deposit.


Whilst the RLA still believes that an advance payment of rent is not a tenancy deposit, judges are appearing to regard it as an attempt to avoid the legislation. As a result, if you apply for possession using Section 21 against an assured shorthold tenant, at the least you could have to attend Court to explain the situation and persuade the judge that the money you received genuinely was an advance payment of rent and not a tenancy deposit. If you bring action based on rent arrears you could face a claim by the tenant that the advance payment of rent was not that at all but was a deposit. This could mean that the tenant could then try to counterclaim for the penalty to avoid rent arrears. Either way, you could face delay and anxiety in obtaining possession.


It may well be the case in time that the position is clarified in favour of the landlord. We are however, issuing a strong warning to landlords about the problems which could be encountered by you. Our advice therefore is not to take an advance payment of rent from the tenant because of the potential uncertainty and problems you might face. Another alternative to look at is taking an administration fee. This is a non returnable charge which you take for preparing the tenancy, signing the tenant up and initial administration. You could simply decide not to take a deposit. Alternatively, you can take a tenancy deposit but you must then register it under one of the schemes.


If you have already taken advance payment of rent you should seriously consider whether to protect it as a deposit under one of the Statutory Schemes. If you do decide to take this step you will need to notify the tenant(s) and give the prescribed information as well."

see also:

"Other ways which have been suggested which will not work are:-

• Charge rent and offer cash back to the tenant if the property is left in a good condition with the rent paid in full – RLA legal advice is that this arrangement falls foul of the tenancy deposit scheme. The cash back element would have to be paid into the custodial scheme or protected under the statutory insurance deposit scheme."

Riccal

whatdowedonext wrote: »

Yes but they haven't confirmed when they'll return it. We've asked for a chq when the keys are handed in and we've vacated the property.

I am either misreading something or the above indicates that you are agreeing to the LL/LA keeping the rent in advance until you go and you paying the rent as normal till that point. The key part being that you have already asked for a cheque when you hand in the keys??

Reading all the previous I am assuming that is a misconception?

Riccal

whatdowedonext

Only meant 1/2 the advanced rent to be handed back at end the other 1/2 to be used as final months rent

Mrs_pbradley936

Well you will not be in arrears will you? Therefore you will not be damaging your credit rating, also the threat to give you a poor reference will be invalid because you will not be leaving with unpaid rent owed.

whatdowedonext

Mrs_pbradley936 wrote: »

Well you will not be in arrears will you? Therefore you will not be damaging your credit rating, also the threat to give you a poor reference will be invalid because you will not be leaving with unpaid rent owed.

I just wish the LA & LL would see it that way. He'll probably levy a £35 charge for overdue rent & then charge 3% above Lloyds lending rate for any arrears. Guess where he'll deduct those charges:eek:

Mrs_pbradley936

whatdowedonext wrote: »

I just wish the LA & LL would see it that way. He'll probably levy a £35 charge for overdue rent & then charge 3% above Lloyds lending rate for any arrears. Guess where he'll deduct those charges:eek:

Well then point out what I said and if necessary ask the rent officer at the Council for support. You are being blackmailed. I do see that when you were a bad risk you had to jump through hoops that others don't - and you did. However now you are no risk and you do not wish to part with money and "trust" a blackmailer to return it!

DVardysShadow

whatdowedonext wrote: »

I just wish the LA & LL would see it that way. He'll probably levy a £35 charge for overdue rent & then charge 3% above Lloyds lending rate for any arrears. Guess where he'll deduct those charges:eek:

Nothing is overdue, there will be no arrears. If you are still worried about this, put it in a letter.

On leaving day I expect <£900> to be returned without deductions, as this will the surplus on the rent account. Failure to return this money in full will result in the matter being referred small claims court without further notice.

But I would only do this if they have said anything to indicate they would actually make a charge. Have they indicated this?

whatdowedonext

DVardysShadow wrote: »

Nothing is overdue, there will be no arrears. If you are still worried about this, put it in a letter.

On leaving day I expect <£900> to be returned without deductions, as this will the surplus on the rent account. Failure to return this money in full will result in the matter being referred small claims court without further notice.

But I would only do this if they have said anything to indicate they would actually make a charge. Have they indicated this?

They sent us a demand letter when we didn't pay this month's rent as we felt we were in advance payment! On that letter they said if we didn't pay by 13th they would levy a charge of £35.25 and on each occasion that the rent is late.

Mrs_pbradley936

whatdowedonext wrote: »

They sent us a demand letter when we didn't pay this month's rent as we felt we were in advance payment! On that letter they said if we didn't pay by 13th they would levy a charge of £35.25 and on each occasion that the rent is late.

BUT THE RENT IS NOT LATE!!! Also they cannot invent their own clauses which give you less rights than the law allows you.

whatdowedonext

DVardysShadow wrote: »

Nothing is overdue, there will be no arrears. If you are still worried about this, put it in a letter.

On leaving day I expect <£900> to be returned without deductions, as this will the surplus on the rent account. Failure to return this money in full will result in the matter being referred small claims court without further notice.

But I would only do this if they have said anything to indicate they would actually make a charge. Have they indicated this?

They have so I have gone ahead and sent the letter, thank you.

R & L