Paying rent in advance

Tsavorite

Hi all,

I have signed a lease on a flat for 12 months from July, with a break clause after 6. As I've just finished university and don't start my job until September, I was asked and agreed to pay three months' rent in advance and then nine monthly payments thereafter.

I've paid the three months' rent and now don't have to pay anything until October. Today I got an email from the letting agent saying that the landlord had asked them to use the large payment to cover July's rent and then the last two months (May and June 2014), but I still don't have to make another payment until October.

If I understand this correctly, this means essentially that I will be paying my rent two months in arrears - when I pay in October, that will cover August, so when I make payments in May and June, that will cover March and April and I won't be up to date until the end of the tenancy. This seems a little strange to me - can anybody shed any light on the rationale behind this? Is the landlord just deferring tax until the next tax year or is there anything else that I need to be careful of? Or maybe it's just the way things are done?

Many thanks for your help!

00ec25

have you paid a deposit as well as the up front rent?
a LL assigning rent paid in advance to cover the final 2 months rent is unusual nowadays and could be deemed to be a deposit in disguise which is illegal if it is not protected as a deposit

Tsavorite

I did pay a deposit, yes, which is being held in the Deposit Protection Service. However, I've just this moment had an email saying that landlords usually ask for rent in advance to be held for the last two months of the tenancy but as we agreed in advance that this extra rent would mean I didn't have to pay again until October when I'm working, they will apply it to August and September instead of May and June.

Odd, but thanks for replying - I hadn't realised it could be a deposit in disguise so that's useful to know for the future!

Smith_007

I was asked and agreed to pay three months' rent in advance

You paid 3 months advance to the letting agent?
Better hope nobody goes bust :eek:

an email saying that landlords usually ask for rent in advance to be held for the last two months of the tenancy

That's news to me!
Pay your rent normally and on-time and tell the agency to go swivel.

I'm not sure what your agency is doing here, but they are certainly being a bit 'creative' with rent payments. Your deposit is safe. However you are wise to be cautious.

DominicJ_2

I had wondered what happens to people who pay rent in advance and then the LL goes bust and the house is repossed.

G_M

DominicJ wrote: »

I had wondered what happens to people who pay rent in advance and then the LL goes bust and the house is repossed.

If the letting agent took the money, and then when bust, you are fine. Your contract is with the landlord - the agent is just... his agent. So by paying the agent you in law paying the LL.

So your rent is deemed 'paid'. The landlord, of course, has a problem if the agent has not passed on the rent to him. But that is the LL's problem, not the tenant's.

If the landlord goes bust, read:

Repossession (What happens if a landlord's mortgage lender repossesses the property?)

ValHaller

Tsavorite wrote: »

Today I got an email from the letting agent saying that the landlord had asked them to use the large payment to cover July's rent and then the last two months (May and June 2014), but I still don't have to make another payment until October.

I absolutely would not do this. It leaves you vulnerable - you will probably be put under pressure to do catchup - and once you do, if the LL gets repo'd, it will be goodbye to your money. In fact the very suggestion makes me think that the LL is at risk of a repo.

Have you moved in yet? I think if you have not, you may find that refusing is a deal breaker. But if that happens, you can be sure that the LL is in problems.

Tsavorite

I haven't moved in yet but the agent looked through my records and realised that, having agreed to pay the first three months' rent in advance, they would apply it to the first three months of the tenancy.

Do remember that I'm for all intents and purposes unemployed until September and have never had a 'normal' AST (ie one that isn't a student tenancy!) so I don't find it quite so odd that the landlord would want the rent paying until I start my job. He also hasn't taken a guarantor. Sadly it seems to have been quite common among my friends too when they've been looking for places - in a landlord's market they can make all the demands they like.

So all I can do now is cross my fingers and hope the agent wasn't lying when she said that the landlord does not have financial problems and is looking to expand his empire...!

[Deleted User]

This makes absolutely no sense. There is no difference to the landlord financially in this situation, so the motive cannot be financial, the only possibility I can think of is a Section 8 requires 2 months of arrears, but why on earth would they want you to always be in 2 months of arrears? I guess maybe they're planning to sell the property at some point and want the flexibility to get a court order to evict you at the time of sale but that just seems odd.

I would refuse, nothing good can come of this. Either you're setting yourself up for eviction or you're aiding in tax evasion. If you've already paid a deposit and signed a tenancy agreement they can't end the tenancy.

BazzaDP

I wonder is it something to do with the break clause? So if you leave after 6 months is the LL going to keep the 2 months as already paid and still demand the other 6 months?

I'd agree it's an unusual situation. You should give extra guarantees as you have no employment but this one seems weird. Have a chat with letting agency and so this seems unusual and ask why they are doing it.

Alternative is to ask for the extra 2 months to be the deposit but this may actually work against you as you won't get that back until after the tenacy ends then.

Smith_007

If you've already paid a deposit and signed a tenancy agreement they can't end the tenancy.

Red Alert !
Be careful giving this advice.

Almost certainly, he hasn't yet signed a tenancy agreement...... even if he has paid a deposit.

A landlord/agency will only give you a tenancy agreement to sign on the day you move in. Thus you have no rights until the day you move in. Only rarely have I know exceptions to this.

The vast majority of the time, a prospective tenant signs some form of 'pre-tenancy' agreement when handing over a deposit & holding deposit & fees. This leaves the landlord/agency holding all the cards and free to pull out at any time, for any reason, until the 'real' tenancy agreement is signed.

It's just another sneaky trick landlords play in this pitifully unregulated market.