Rent affordability, upfront payment for lower monthly rent

needabed

I'm currently offering a house for rent, but the agency I'm using says they only accept people who can show 30x the monthly rent as earnings or have a guarantor.
I've sent an email to the agency asking if a upfront payment and a lower monthly rent would work, but won't hear back until Monday. So I am posting here to see what people think.
The monthly rent is £1,800, so potential tenants need to show they have £54,000 of income. But if they paid upfront £3,600 the monthly rent would be £1,500 and they would need to show £45,000 of income. And £6,600 upfront would be £1,250 a month and they would need to show £37,500 of income.
I've read about tenants who pay 6 or 12 months upfront could be potentially dodgy, so would this in between option make sense? Or is there some law I've missed where something like this isn't allowed?
Thanks.

[Deleted User]

needabed said:

I'm currently offering a house for rent, but the agency I'm using says they only accept people who can show 30x the monthly rent as earnings or have a guarantor.
I've sent an email to the agency asking if a upfront payment and a lower monthly rent would work, but won't hear back until Monday. So I am posting here to see what people think.
The monthly rent is £1,800, so potential tenants need to show they have £54,000 of income. But if they paid upfront £3,600 the monthly rent would be £1,500 and they would need to show £45,000 of income. And £6,600 upfront would be £1,250 a month and they would need to show £37,500 of income.
I've read about tenants who pay 6 or 12 months upfront could be potentially dodgy, so would this in between option make sense? Or is there some law I've missed where something like this isn't allowed?
Thanks.

Are you the landlord in this scenario? If so the agent works for you not the other way around. Ultimately it’s up to you to decide who you want to let the property to not your agent. 

steampowered

The letting agent works for you. If you are happy to accept guarantors with a lower income than 30x, instruct the agent accordingly.

While you want to make sure that prospective tenants can afford the rent without falling into financial difficulties, the letting agent's approach sounds pretty blunt to me. There are situations where people might have an annual income of less than that but are still comfortably able to afford the rent and would make excellent tenants.

It's especially blunt when you are looking at guarantors. There are categories of people who make excellent guarantors without earning 30x the rent - e.g. you could have a retired couple who own a large house and have significant savings that would easily cover the rent; but fall below the 30x threshold because they are retired.

greatcrested

You seem to have a strange idea about what the word 'agent' means. An agent acts on behalf of their principal. In this scenario, you are the principal. The property belongs to you. It is up to you whether to let the property, when to let it, and who to let it to. The agent is simply there to help you accomplish your aims. Indeed - surely that is what you are paying them for!?

If the agent is imposing restrictions which do not meet your aims, find a better agent!

Now read:

Post 9: Letting agents: how should a landlord select or sack?

needabed

I chose the agent as they guaranteed the rent and would deal with evictions etc. But I see now that they require tenants with such perfect history that it's very unlikely that they will stop paying in any case.
Seems to me my choice is either a very high standards agent and guaranteed rent or a low standards agent and maybe end up with no rent for 3 months whilst eviction happens.

greatcrested

You don't seem to get it.

It's the type of tenant not the type of agent you need to focus on. What is your target market? Who do you want to let your property to? Why are you leaving the selection up to your agent? By all means use an agent to identify potential tenants, but then make the selection yourself.

steampowered

Ah - if the letting agent guarantees the rent, then you may have to accept their criteria to fall within the rent guarantee.

It is likely that there is an insurance product behind it; it may be that one of the terms of the insurance is that the tenant or guarantor must earn 30x the monthly rent.

You could consider instructing a different agent, or instructing this agent without a rental guarantee, and instead purchasing your own insurance policy to cover non-payment of rent and eviction costs.

needabed

Yep insurance and seems to be pretty much like any other insurance whereby if you match all the criteria you are covered, but by matching all the criteria the likelihood of a claim is virtually zero.
Just wondering if it is common practice for a tenant to pay a lump sum of the rent upfront and have a lower monthly rent for the rest of the contract. 

anselld

Suspect the agent will be telling you tomorrow that this llittle ploy doesn't work.  Apart from anything else, at the end of the term when the up-front money has run out you (they) are suddenly uninsured and the tenant suddenly has to afford the full rent again.  

needabed

anselld said:

Suspect the agent will be telling you tomorrow that this llittle ploy doesn't work.  Apart from anything else, at the end of the term when the up-front money has run out you (they) are suddenly uninsured and the tenant suddenly has to afford the full rent again.  

Near the end of the term the tenant either shows they can afford it or pay a lump sum again for the new term. I would think in terms of the insurance that a tenant who is willing to pay an upfront amount of rent is less likely to default.

needabed

Update for any future people who read this. The agent said this is a tenant fee ban and is illegal.