Rent affordability, upfront payment for lower monthly rent

Sensory

needabed said:

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

Dubious. Rent paid in advance, is still just rent, and not a banned fee.

When I started renting on a low income, my monthly rent was 63% of my gross income so I failed the EA's referencing, but the landlord was happy to accept 6 months of rent in advance (the whole AST).

sharp910sh

The Tenant fee ban does not allow this. The only fees allowed are:

• the rent
• a refundable tenancy deposit capped at no more than five weeks’ rent
• a refundable holding deposit (to reserve a property) capped at no more than one week’s rent

In addition, your landlord or agent can charge you:

• a fee for late rent payments, if the rent is 14 or more days late, which interest can be charged on
• for the actual cost of replacing a lost key, evidenced by a written receipt
• payments to change the tenancy (for example a change of sharer in a joint tenancy or for keeping a pet at the property) capped at £50, or reasonable costs incurred if higher, evidenced by a written receipt
• payments for leaving a tenancy early, before the end of the fixed-term, when requested by the tenant. Landlords should only charge rent to cover any void period until a replacement tenant is found

You cannot charge additional rent upfront. 

anselld

needabed said:

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

Agent is idiot.  Advance rent is allowable under the fee ban.
Probably just an easy way to say no.

needabed

Seems strange advanced rent is fine, but not partial advanced rent. When you buy a place its 10% upfront + £x a month and the higher the upfront amount, the lower monthly mortgage payment. 

saajan_12

sharp910sh said:

The Tenant fee ban does not allow this. The only fees allowed are:

• the rent
•  .. 

Incorrect. Partial rent upfront is precisely within the first item in your list, as its part of the rent. The advertised and contractual rent would be say £1,000 pm. The schedule for payment would be say £250 x 12 on day 1, £750 on the 1st of every month. Once the initial 12 month term is over, the monthly rent is exactly what was agreed, ie £1,000 pm, which can be paid monthly or upfront or some combination. 

needabed said:

I chose the agent as they guaranteed the rent.

Ah so that's the difference. The agent will guarantee the rent of people who fit their criteria. They aren't going to take someone who can't afford it, and then almost certainly have to make up the difference for nothing. 
There's no mandatory affordability check, you're welcome to choose any tenant, but you of course take the risk that they can't pay etc. You have to decide whether you prefer 
- waiting longer (and suffering the void) to find a tenant who fits the agent's criteria and get 'guaranteed' rent
- get tenant who doesn't fit criteria in sooner, forgo the guarantee, and take your chances
- lower rent but get this guaranteed
- ..

needabed

So partial rent upfront is ok? In your example the tenant pays £3000 upfront rent and then £750 every month instead of £1000. The agent would only need to cover £750 if tenant defaulted, but this would seem very unlikely since they have invested £3000. But in terms of affordability the criteria would come down from £30,000 to £22,500, which would allow far more people to be interested.
The agent says "We are unfortunately unable to ask for money upfront that is less than six months’ worth of rent as this would count as a tenant fee ban and is illegal. However we can ask tenants to pay a minimum of six month in advance on a six month contract to avoid the need to pass references.".
Void equals no rent, but not much to worry about. Months to process evictions with costs and no money coming would be worse.