Can letting agent keep full year's rent paid in advance?

Eebe

Hi, my mother has recently moved into care and we (her children) are renting out her property for a few months while we decide when to sell it (will be needed to fund her care home). The letting agent found tenants very quickly who were so keen to move in that they have paid for a full year in advance. I won't know until after the BH weekend but I suspect the agents are planning on keeping the rental income and releasing it to us on a monthly basis. I would prefer them to pay it in full now so that I can put it in an ISA for my mother until such time as it is needed for the fees.  Can I insist on this? The terms of business do not seem to cover this eventuality.  I expect the agent to say they are keeping it as protection for the tenants, but I don't feel they need protection because they want to live there for a year and they can as they have paid.  I'm actually more concerned about protection for us. What happens if the letting agents go bust in the next year and our rental income is lost? That is a far greater issue to me as we will then be in a terrible position.  I haven't been sent the tenants agreement yet but I believe it is a 12 month AST with a break clause after 6 months. 

Any advice will be greatly appreciated.

MDMD

Eebe said:

Hi, my mother has recently moved into care and we (her children) are renting out her property for a few months while we decide when to sell it (will be needed to fund her care home). The letting agent found tenants very quickly who were so keen to move in that they have paid for a full year in advance. I won't know until after the BH weekend but I suspect the agents are planning on keeping the rental income and releasing it to us on a monthly basis. I would prefer them to pay it in full now so that I can put it in an ISA for my mother until such time as it is needed for the fees.  Can I insist on this? The terms of business do not seem to cover this eventuality.  I expect the agent to say they are keeping it as protection for the tenants, but I don't feel they need protection because they want to live there for a year and they can as they have paid.  I'm actually more concerned about protection for us. What happens if the letting agents go bust in the next year and our rental income is lost? That is a far greater issue to me as we will then be in a terrible position.  I haven't been sent the tenants agreement yet but I believe it is a 12 month AST with a break clause after 6 months. 

Any advice will be greatly appreciated.

Ignoring the contractual matter over whether they should retain the funds, by law they are required to protect the money they are holding.

You should be protected but check how they are covered.

https://www.gov.uk/client-money-protection-scheme-property-agents

dimbo61

Have you got Lasting Power of Attorney ? for your Mum,s home.
Have you checked the Lettings Agents are registered in one of the 2 Letting Agents redress schemes ?
While your paying 8/10/12% + vat to the agents your still legally responsible for making sure all the checks and LL responsibilities have been carried out !
Taking on tenants who pay 12 months up front would make me nervous.
Have they got a UK guarantor?
Has the L.A. done the checks and sent you the information ? Passports, driving licence, employer references, credit checks, Right to Rent, How to Rent, EPC,EICR, PAT testing, Fire safety, 
Have you taken 5 weeks deposit and 12 months Rent in advance ?
Have you got a copy of the Tenancy agreement?
Video Inventory seen and signed BEFORE they move in and get the keys.

Eebe

dimbo61 said:

Have you got Lasting Power of Attorney ? for your Mum,s home.
Have you checked the Lettings Agents are registered in one of the 2 Letting Agents redress schemes ?
While your paying 8/10/12% + vat to the agents your still legally responsible for making sure all the checks and LL responsibilities have been carried out !
Taking on tenants who pay 12 months up front would make me nervous.
Have they got a UK guarantor?
Has the L.A. done the checks and sent you the information ? Passports, driving licence, employer references, credit checks, Right to Rent, How to Rent, EPC,EICR, PAT testing, Fire safety, 
Have you taken 5 weeks deposit and 12 months Rent in advance ?
Have you got a copy of the Tenancy agreement?
Video Inventory seen and signed BEFORE they move in and get the keys.

We do have LPA for mum. I haven't checked about the redress schemes but will do that.

The agents have done the credit reference and the Right to rent check. They've told us that's all fine. I don't know about a guarantor - but is one needed if a year's rent has been paid in advance?

I'm interested to know why paying a year up front would make you nervous? The agent did say we can get rid at the break clause if necessary. Fingers crossed they are lovely and we want to keep them! 

We seem to have paid for every test under the sun prior to the tenants moving in so hopefully everything is covered.  It seemed pretty comprehensive. We didn't see a copy of the inventory before the tenants moved in but we sold them anything they wanted to keep so the only furnishings that belong to us are the carpets.

We did get a deposit as well as the rent in advance.

housebuyer143

They should be able to pay it all to you but most will insist a retention is held on account to cover fees such as maintenance fees etc, so you might only get 11 months and the last one at month 12.
I worked at a large national agent and it was always paid monthly to the landlord unless they insisted they had it all paid upfront.

propertyrental

You are the landlord(s). You decide which tenants to accept. You decide whether to require 12 months rent up front ad/or a guarantor. You decide who holds that money.

Hopefully it's all specified in your contract with the agent. If it isn't, why not?

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

Some tenants offer to pay upfront to keep the LL/agent at arms length thereafter eg running a brothel, cannabis farm or other dodgy enterprise....

what do you know about the tenants?

Wyndham

Why have they paid 12 months in advance? Why would someone do that rather than pay monthly?

My understanding is that the worry is that the tenants pay 12 months up front so they can refuse any checks etc. So if they were doing something illegal in the property, this wouldn't be picked up.

So, back to my original question - what's in it for them to do it this way? I'd at least want to understand why they are doing it.

It also sounds like you are an 'accidental landlord'. While I hope you do understand what it means to be a landlord, there is a very good thread here:  https://forums.moneysavingexpert.com/discussion/5180214/tenancies-in-eng-wales-guides-for-landlords-and-tenants/p1 which outlines rights and obligations on both sides. I'd suggest you read it, and take advice if there is anything there you don't understand.

ArbitraryRandom

Another concern is the 6 month break clause - generally they operate both ways, so your tenants can leave at 6 months (at which point you would need to return to them their overpaid rent). 

Eebe

propertyrental said:

You are the landlord(s). You decide which tenants to accept. You decide whether to require 12 months rent up front ad/or a guarantor. You decide who holds that money.

Hopefully it's all specified in your contract with the agent. If it isn't, why not?

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

Some tenants offer to pay upfront to keep the LL/agent at arms length thereafter eg running a brothel, cannabis farm or other dodgy enterprise....

what do you know about the tenants?

It felt very much like the letting agent decided all this - I guess because it's all new to us! However their contract was quite clear that the responsibility for choosing the tenant was down to us. 

The tenants are older and need a bungalow. Their previous arrangement fell through just as we were thinking about renting it so the agents mentioned us to them, and as there aren't many bungalows they were desperate to take it. I think that's why they offered to pay a year up front because they want to be there for the long term. We may have to sell before a year is up so didn't want to commit to a full year, hence the break clause after 6 months.  My sister has met the tenants a couple of times and they have exchanged phone numbers (she lives nearby) but she is keen to keep them at arms length as we are paying the agents for a full managed service.

With regard to the contract with the agent, I went through it in detail with them. There were some things I didn't like but they insisted they wouldn't change anything as it is a standard contract.  We'll see how it goes.  They haven't been great so far apart from finding a tenant before the property was even available so I guess we can't complain too much yet.

Eebe

Wyndham said:

Why have they paid 12 months in advance? Why would someone do that rather than pay monthly?

My understanding is that the worry is that the tenants pay 12 months up front so they can refuse any checks etc. So if they were doing something illegal in the property, this wouldn't be picked up.

So, back to my original question - what's in it for them to do it this way? I'd at least want to understand why they are doing it.

It also sounds like you are an 'accidental landlord'. While I hope you do understand what it means to be a landlord, there is a very good thread here:  https://forums.moneysavingexpert.com/discussion/5180214/tenancies-in-eng-wales-guides-for-landlords-and-tenants/p1 which outlines rights and obligations on both sides. I'd suggest you read it, and take advice if there is anything there you don't understand.

We are very much accidental landlords but I have read a fair amount around it now.

I think they were just desperate to get the property for health reasons which is why they offered to pay up front. 

And now I'm very keen to get hold of that rent on mum's behalf rather than the agent benefitting from it.

Eebe

I'm sure the agent won't want to pass across the rent, but I really want to know if I can insist on it?

I had already asked them for the deposit so I could lodge it with the protection scheme in order to save the £84 fee they will charge us but they have refused as we are on a fully managed service.