Potential new rental confusion - complicated situation

Khw21

I'm looking at signing a new rental agreement and I'm unsure about how the new laws will affect me. Last year we had to move from the flat we had been renting for 15 years as my landlady sold it. We've since been living (myself, working full-time but on a low income and my full-time student daughter) in a small one bedroom flat which is totally unsuitable for us.

As I won't pass referencing for a two bedroom flat, due to only having one income, I've managed to put together six months rent upfront with a combination of savings and borrowing (at a low interest rate). I've found a very nice flat at a good price and the agency agreed to take six months rent up front. I assumed this meant after six months we would move to monthly payments, but the agent wants six months upfront each time until my situation changes, which it won't until my daughter leaves university and starts working. Six months upfront I can do once (just about), but not continuously.

At the last minute a friend agreed to be a guarantor, which seemed like a dream come true. It now seems as though they have only agreed to act as guarantor for six months. The agency has suggested either a six-month contract, after which they will 'reassess' or a twelve-month contract with a six-month break clause, with the rent guaranteed for the first six months and me paying upfront for months 7-12.

If the friend acts as guarantor for the first six months, is she then liable past that period?

If we get a six-month tenancy (ending in September), I'm assuming that the change in the law means we won't then be able to pay six months up front and I won't pass referencing due to low income.

Or is this all irrelevant post-May and will I be able to insist on monthly payments with no repercussions? Is it a concern that the agent doesn't seem to know the rules?

There may be another option of much, much less nice flat who will accept six months upfront and then monthly payments, although I have already paid the holding deposit on the first flat.

Btw, we live in London and there is no option of a cheaper rent where I will pass referencing anywhere within a reasonable commute of my office, I've looked! There is no family who can help. I've been in contact with the council and I've been on the waiting list for a housing association for years.

TIA for any advice. I'm sorry this is such a long post!

El_Torro

How long your friend is a guarantor for depends on what they sign up to. If they sign a contract specifying 6 months then it’s just 6 months.

You are right in saying that the landlord / letting agent can’t insist on 6 months rent up front with the new legislation. However I don’t think there is anything that stops them refusing to have you as a tenant if they think you can’t afford the rent.

You say your daughter is at university. Plenty of students work while studying, can she do this and help with the rent? Or move to student accommodation and leave you in the 1 bedroom flat?

Khw21

My daughter rents a student flat during term time outside of London, but she's autistic and comes home often to decompress. She's working full time in London during the summer but no agency will count that or her student loan as household income. The issue isn't the rent, I can afford it on my salary, the issue is that I can't pass referencing without either a guarantor or paying six months upfront.

My confusion is whether they can refuse us as a tenant once we're already in the property? If we do sign a six month contract, once that ends does it then become a rolling contract or can we then be refused a further contract as they won't be able to ask us for six months upfront and I won't pass referencing? I need to get some clarity before I email the agent again.

silvercar

https://forums.moneysavingexpert.com/discussion/comment/81903687#Comment_81903687

My understanding is that they won’t be allowed to demand more money up front and they can’t evict on a section 21. They won’t be able to evict you by claiming they want to sell, without being blocked from renting it out again for many months. So I would think you are safe.

silvercar

https://forums.moneysavingexpert.com/discussion/comment/81903634#Comment_81903634

Guarantor contracts are generally open ended.

Khw21

https://forums.moneysavingexpert.com/discussion/comment/81903694#Comment_81903694

In that case I will need to be absolutely sure this isn't, as it's a friendship I don't want compromised…

Catonthemoon

(1) My L/L was willing to accept 6 months in advance when I moved into my current flat. I knew I would have to pay a further 6 months in advance from month 7. As I didn’t have to make any rent payments from months 1- 6, I was able to put aside roughly the monthly payment for those months so that I had enough to pay a further 6 months in advance. Could you not do that?

(2) As you have paid a holding deposit on the 1st flat ( the better option), I would stick with that.

Khw21

https://forums.moneysavingexpert.com/discussion/comment/81903851#Comment_81903851

The issue here is that month 7 will be after the law changes on 1 May, and so they won't be able to ask for 6 months upfront. Also as the money will be partly borrowed and will need to be paid back and I'll use the money that would have gone towards rent to do this. I won't be able to borrow this amount twice.

_Penny_Dreadful

It doesn't matter if you sign a 6 month fixed term now because comes 1st May it will cease to be fixed term and will automatically become periodic. Also, after then the landlord will need a ground to evict you.

It's unusual for landlords to re-reference tenants after the tenancy has started and it's also unusual for a guarantor to end with the fixed term. It's one of the reasons I'd never offer nor advise someone to become a guarantor.

saajan_12

https://forums.moneysavingexpert.com/discussion/6657374/potential-new-rental-confusion-complicated-situation

As I won't pass referencing for a two bedroom flat, due to only having one income, I've managed to put together six months rent upfront with a combination of savings and borrowing (at a low interest rate). I've found a very nice flat at a good price and the agency agreed to take six months rent up front. I assumed this meant after six months we would move to monthly payments, but the agent wants six months upfront each time until my situation changes, which it won't until my daughter leaves university and starts working. Six months upfront I can do once (just about), but not continuously.

..

Or is this all irrelevant post-May and will I be able to insist on monthly payments with no repercussions? Is it a concern that the agent doesn't seem to know the rules?

Are you sure you wouldn't be able to afford it? Theoretically if you pay 6 months before you move in, then the money you would have put towards rent each month could be saved up and paid in a lump sum to the next 6 month payment, and so on. The caveat to this is how much of the first 6 months is from a loan, as you'd presumably use what would be rent money to pay off the loan.

However I think its irrelevant as my read of the RRA is that after May, they can't demand rent more than 1 month in advance, so if you pay monthly after the first 6 months there's nothing they can do.

At the last minute a friend agreed to be a guarantor, which seemed like a dream come true. It now seems as though they have only agreed to act as guarantor for six months. The agency has suggested either a six-month contract, after which they will 'reassess' or a twelve-month contract with a six-month break clause, with the rent guaranteed for the first six months and me paying upfront for months 7-12.

If the friend acts as guarantor for the first six months, is she then liable past that period?

Usually guarantees are open ended, but I'd read the document they send, theoretically they could draft something with a limited timeframe. Post it here if you want and we can help opine on any liability post 6 months.