Our tenant failed referencing and we’re considering Rent in Advance as an option. I’d like to know how it works in practice. Say the tenant agrees to 3 months in advance, does that mean that every 3 months they have to pay 3 months rent in advance? Or do they pay 3 months now, and then start monthly payments in 3 month’s time?
(If it’s the latter I’m not sure how it offers protection since we’d be in the same boat again in 3 months time?)
Finally, how do we decide on how many months’ rent to ask for in advance?
All rents are paid in advance anyway. Surely they need a guarrantor? Whatever you both agree to in the contract is IT. Why accept someone who has failed a reference, if you are going to take someone who fails, theres no point in checking in the first place
It’s very important to ensure that it is clearly stated in the agreement that it is ‘Rent in Advance’ and not a ‘Tenancy Deposit’. Dates and amounts must be clearly stated and you must ensure that there are no contradictory clauses elsewhere in the agreement. My personal opinion is that I would only accept rent in advance along with, not instead of, a tenancy/security deposit equal to 5 weeks rent (which would have to be protected).
I would only accept one months rent in advance as I believe the more a tenant pays in advance the more notice you need to give them to vacate your property. I make my business model simple, fail the reference checks and you don’t get the keys, I do not accept Guarantors as it potential makes getting the rent paid more complicated. It sounds tough but why choose someone who may potentially cause you problems rather than selecting a tenant who passed the reference checks and can afford the rent and any future rent increases.
Hey all - important to distinguish here between rent in advance and a rental period.
A tenancy’s period is how often the rent is due for the property as a matter of course, and has knock-on effects for how much notice must be given when serving rent increase and eviction notices. Most ASTs have a monthly period, i.e. rent is due once a month and the rental period runs month-to-month if the tenancy lapses into a periodic tenancy at the end of the fixed term.
Rent in advance is simply paying more than one rental period’s worth of rent before the tenancy starts. E.g. paying six months’ rent up before beginning a monthly tenant, or paying four weeks’ rent ahead of a weekly tenancy.
Taking multiple months’ rent in advance reduces your risk insofar as it guarantees more rental income at the start of the tenancy than just taking the first month’s rent.
Yep exactly. Adding a guarantor to the tenancy reduces the risk of rent arrears further, since the guarantor will be liable to pay the rent if the tenant does not.
It’s a tradeoff between the tenant being able to afford it vs. you guaranteeing the receipt of more of the rent via its advanced payment.
Please avoid these kind of tenants. I’ve had hell with my 6 month tenancy agreement 3 months rent paid in advance and then when it came to the end of contract they refused to leave due to no more money left and remained in my property for a further 3 months rent free. I’ve just got rid of them!
Sometimes it’s safer to say sorry your credit wasn’t passed.
Sophie3 Right right right just because someone passes a reference does not mean you HAVE to accept them, you may not like them. They may not be your “cup of tea”. Next time get 6 months in advance if offered 3. Put them on the tenant avoid list theres one online… Another landlord named a few on this site.