I own many rental properties, have never had a non payer and frequently take 6 months deposit (the most allowed in scotland) up front. I also insist on seeing 3 months bank statements from both partners and the bank statement with the source of funds. Anyone unwilling to give this doesn’t get considered. 99% of people do. Check out their source of funds, ask questions and listen to answers carefully and treat the case on its merits. Too many people are quick to their judgements and form opinions based on one or two negative experiences.
3 Likes
Hi, I too take 3 months in advance, touch wood with no issues, 12 months I have done once but did look at the circumstances in detail. You would need to do quarterly inspections to ensure the property was being looked after and legal.
Bank statements, references, as someone said lifestyle, and whether you think they would be a good tenant (that comes with experience and a health warning). A guarantor is something you should look at for your own protection. You may also want to add a clause stating the renewal of the AST should be paid 6 weeks in advance. Never done this but at least you would have 1 year and 6 weeks rent and either feel confidence or if it didn’t arrive have bells start ringing and time to consider the way forward; unless a new rental plan was agreed. Covid may have hit a lot of people but there is still work of varying types around and your prospective tenants attitude to work may help your decision.
One recent new tenant lost his job, family and home all in three weeks, he took a lower paid job elsewhere to see him through until he gets on his feet properly. That’s the attitude you want to see. I still obtained a guarantor though and so far monthly payments are progressing okay…
1 Like
The red flag to me would be the temporary accomodation. That means they have been kicked out (if the council is providing it) or walked away (if its a friend/family) from the previous property. Given tenancies at the moment have a minimum 6 months eviction period why would someone do that?
A void at the moment is better than months of trying to evict a non-paying tenant imo
If you do take the rent up front they should start paying rent from day 1 so that they are always X months in hand. This should now be at least 6 months so that if they miss a month you can start the 6 month eviction period.
1 Like
I have recently had a tenant pay 12 months upfront. Her marriage had broken down and she had given up work when she married. She is a lady in her 60’s and gut feeling was I liked her. She provided me with ID and bank statements and utility bill and previous landlord ref prior to when she married. She hopes to secure a new job during the next 12 months and will receive income support to help should she not. I’ve taken the chance as her referencing was good and her husband paid the rent for her.
3 Likes
Is that legal? Would the 6 months not be a deposit?
As long as the lease is handled properly, no. This was decided by the tribunal.
However if the landlord is lazy and gives a standard “pay monthly in advance” lease and doesn’t handle the money properly it could become an unprotected deposit, yes.
I dont think the rent in advance can exceed the remaining term of the ast, eg if you offer a 6 month ast you can’t take 6 months rent upfront and then rent at start of second month as that rent wouldn’t be due under the contract. You can say the last months rent is in advance which does provide some extra security.
1 Like
I think it would be safe to take the last month of the fixed term as rent in advance as that is a known period, but not the last month of the tenancy. That’s an unknown period and could be challenged by the tenant as a security against performance of the contract - ie a deposit.
Shelter says it is fine to have last month of tenancy paid upfront. They dont tend to say landlords can do things that they can’t. Given a landlord will always have to give 2 months notice then 1 months rent upfront plus last months means that the amount paid upfront is within the known term to the tenant.
2 Likes
Yes, I see that Shelter don’t qualify their comments on this and I’m surprised by that. It was ruled to be a deposit in county court case some years ago here: It's not a deposit, honest - Nearly Legal: Housing Law News and Comment and although this was overturned by the Johnson vs Old case, I think it does remain a risk where a landlord takes the last month’s rent and then doesn’t use it for the last month of the fixed term, but allows it to slide on during a periodic tenancy. This seems to me to fit squarely into the definition of a tenancy deposit and I would not recommend a landlord take that risk.
The solution there is to remind your tenant they’ve already paid for the last month of the fixed term and that their next payment date is XXX.
Failing to do that is on the landlord. It would be taking double payment for that month of rent which, yes, would be a problem.