London - Rent in advance £27000 - Legal contract?

johnmacbromley

Hi MSE forum,

We (family 2 adults, 2 kids) have been issued a section 21 for a flat we are renting in Bromley London for the last 4+ years, yes a horrible situation!

We are currently paying £1440 a month for the property. Rental prices have jumped dramatically over the last two years, prices for a similar property are now £2250 a month!

Because I've been contracting for the past year I will need to pay 12 months rent upfront to secure a new property. This works out to £27000. A sizeable portion of our life savings.

From my Googling looks like this is called an Advanced Rent Option (ARO).

Question for the forum, is there a standard legal framework for handing over £27000 for rent in advance? What happends if either the Landperson or the letting agency goes into liquidation we could be out of pocket for all our savings! I've been unable to find anything online.

thanks

John

theartfullodger

Afaik there is no "standard" legal framework. (there is no legal requirement for a tenancy in England to be in writing at all.. !!!! - come on England, catch up with sensible countries!!) If you have provided rent in advance (**) - then aiui if landlord/agent goes bust you are likely stuffed, depending on the EXACT wording of the agreement.

** Rent in advance, if the paperwork is badly drafted, could end up being a "deposit", requiring protection, and if incorrectly protected YOU are able to sue for up to 3 x "deposit".  See...
https://www.landlordzone.co.uk/information/case-law/is-rent-in-advance-a-deposit/

Artful: For his sins, landlord since 2000

saajan_12

johnmacbromley said:

Hi MSE forum,

We (family 2 adults, 2 kids) have been issued a section 21 for a flat we are renting in Bromley London for the last 4+ years, yes a horrible situation! - okay, worth starting to to look but you may not need to leave immediately as the notice may/may not be valid and you can wait until a court evicts, after the S21 expires. 

We are currently paying £1440 a month for the property. Rental prices have jumped dramatically over the last two years, prices for a similar property are now £2250 a month!

Because I've been contracting for the past year I will need to pay 12 months rent upfront to secure a new property. This works out to £27000. A sizeable portion of our life savings. 

From my Googling looks like this is called an Advanced Rent Option (ARO).

Question for the forum, is there a standard legal framework for handing over £27000 for rent in advance? - no, you might want to get ID of the person / entity you're paying particularly for the period between paying and moving in. Then just bank transfer. 
What happends if either the Landperson or the letting agency goes into liquidation we could be out of pocket for all our savings! I've been unable to find anything online. - well if there's an issue or you can't move in, then you're stuck suing them. However if you have ID, then you can sue the LL - presumably they own a property, so some assets against any other mortgage / creditors.
Post move in, you'd continue to live there and it would take some time to evict you so would likely last for a good portion of the year. 

thanks

John

Comments in line.. if the upfront rent can be paid on the same day as getting keys, then you're a lot more comfortable as it would take a long time to evict you, so you can essentially live out a good chunk of the rent. 

If you really need to pay before getting keys, then ask for ID of the LL, with their residential address and proof they own the property (LLs don't always have to own property, but they often do and it means there's some assets you can hope to recover from). 

johnmacbromley

Thanks for all the contributions thus far.

The 'How much notice you need to give' section on:

www.gov.uk/evicting-tenants/section-21-and-section-8-notices

might be pertinent for renters paying in advance.  

dimbo61

Before you hand anyone £1 please spend £3 with the  Land Registry checking online who owns the property you are about to move into.
However as others have said it could take months to evict you from your current home.
Please continue to pay your current rent and wait and see what happens 

propertyrental

johnmacbromley said:

....

Because I've been contracting for the past year I will need to pay 12 months rent upfront to secure a new property. This works out to £27000. A sizeable portion of our life savings.
Can you negotiate on this eg 6 months in advance? Or a guarantor instead?

.....

Question for the forum, is there a standard legal framework for handing over £27000 for rent in advance? No
What happends if either the Landpersonlord or the letting agency goes into liquidation we could be out of pocket for all our savings! I've been unable to find anything online.

see also
https://www.propertymark.co.uk/

https://www.ukala.org.uk/ukala-benefits/what-is-client-money-protection/

If LL absconds, does he have assets? Check whether the landlord owns the property (he may not). If he does, then a court could put a charge on the property.

https://www.gov.uk/government/organisations/land-registry

DullGreyGuy

johnmacbromley said:

Because I've been contracting for the past year I will need to pay 12 months rent upfront to secure a new property. 

Are you operating via an umbrella or your own LTD?

Have been a contractor for well over a decade and never had a problem but then I operate via my own company and so the correct answer to my employment status is that I am employed. I have to say I cannot remember how long I had been contracting at the point we first moved after I started but it wouldnt have been vastly after.

Have you actually asked agents or just making an assumption?

johnmacbromley

DullGreyGuy said:

Are you operating via an umbrella or your own LTD?

.......

Have you actually asked agents or just making an assumption?

Thanks for all the responses so far, LL & EA look good, all checks conducted.

DullGreyGuy, only recently operating as an umbrella, thus the need for a large deposit.

The market is definitively more hostile to those not traditionally employed.   

TripleH

As per @dimbo61, spend a little to check that the party wanting rent in advance is legitimate to ask for that before you loose it to a scammer.

Any landlord getting shirty about checks, I'd run a mile. You are paying them so they get 12 months peace of mind, worth the extra timecto sign paperwork

dimbo61

The LL/LA won't find out if you spend £3 with the Land Registry checking out who owns the property.
You can also check the EPC if you have the postcode and number of the house ?  Usefull to know with Cost of Living crisis 
The LA/LL should do Right to Rent checks, How to Rent leaflet, Gas Safe Certificate,  EICR, PAT Testing on any electrical  equipment!

london21

That is a lot of money, would you be in the position to buy?

Can you agree 6 months advance rent rather than 12 months, just seems a lot of money to pay at once for rent.