Move in several months away with ‘holding deposit’

Morning all,

We have agreed a let with some excellent quality tenants but they cannot move in until August 1st due to a long notice period in their professional jobs. We had been lining up other prospective tenants to move in May, when the home is vacant.

We have negotiated and agreed with the new tenants that we will cover the void period of May and they will pay a holding deposit/payment for June and July (to basically cover our mortgage) then move to full rent from August 1st.

So my question is based around how to administrate this? This is my first time using OpenRent so aren’t sure in the flexibility of contracts with how much I can input. I came up with two options but both kind of rely on the ability to make manual changes to OR’s contract template. I would like any advice on either, or new suggestions to be able to use the OpenRent system.

A) Start the rental date from June 1st stating that the rent starts at X and increases to Y from August 1st. (providing OpenRent allows to manually write this into the contract).
B) add a section to the contract (if possible) to lay out the exact situation. This will cover if they change their mind etc. I would suggest something along the lines of paying at the end of May to ‘secure’ June and end of June to ‘secure’ July. Then start the official move in from August 1st.

Obviously we want security from both sides - we want to ensure they continue to intend to move in, and they want more than just bank transferring us rent out of contract.

Finally, we are very local to the property so can regularly enter/drive past to check security etc.

Thanks in advance.
RM

Hi

It’s surprising It’s worth waiting 3.5 months for tenants, there are plenty out there. You would need to arrange specialist insurance for vacant properties which is a lot more expensive, your regular checks are unlikely to be sufficient for standard insurance.

I don’t think it would be possible for either of your solutions and having a lower starting rent would restrict deposit you can take.

You could work out total you are charging for june and july and start the tenancy at full rent on a date that would mean you would get the total rent, ie if rent for june and july was 50% of full rent just start tenancy at full rent from 1st july, with deposit and first months rent paid now.

Hi Richard,

Good points, thanks.

Bit more background - we current live at the soon-to-be rental property and have just had the keys to a new house.

Therefore, this situation semi-suits us as we can continue living at our current home for May now to get a little more renovation done to the new house. I believe most landlord insurances cover 60 days unoccupied so we should be okay, but will be sure to check that when taking out a policy.

I’ll do the maths and see when that would be a start date based on your suggestion. That would certainly keep things cleaner on paper.

Thanks.

well, typically this is if you have a void during an existing period of LL insurance and when you are looking to move tenants in asap. In your case, you will need to actually have a policy which starts with an empty property and you will need to state that you are not looking for tenants so that the insurer/broker knows that they have a long period of higher risk. You’ll probably need to carry out weekly checks on the property and stop all utilities. Check the terms very carefully if you want valid insurance. You’ll also need to run this by your mortgage broker who may not be happy with your plan at all.

The holding deposit is virtually worthless in this scenario because it in no way offsets the financial risk of holding the tenancy for that period of time. Whatever monies you take, you must ensure that the limits on a holding deposit or full deposit are respected so you’re covered legally.

Personally, from decades’ of experience, there’s absolutely no assured way you can know now that an applicant is worth waiting 3.5 months for.

Appreciate your comments thanks.

I was really just interested in if there was a way to administrate this scenario through OR. I’ll check the details on if the 60 days can start with a void but I imagine this is a very common scenario. As you’ll know, landlord’s buy properties to let without a tenant lined up, or needing months worth of renovation so there must be an allowed empty period. Will see.

You’re correct - with weeks, decades or even centuries of experience there’s is no way to know how good a tenant will be. I still know for my fair few years doing this that it’s basically a big game of risk analysis. Given all the information we have for all our enquiries, I deem these lower risk, financially and otherwise, than some people immediately available…. but you’re correct there’s no way of knowing for sure.

They do, and unless they are moving in tenants very promptly, they have to take ‘empty property’ or ‘renovation’ insurance, which is not a standard Landlords policy. You will then be able to switch over to a standard Landlords property once your tenant moves in.

& yes, you are likely to need to evidence weekly inspections, drain down plumbing etc. I know… as I’m doing it at the moment for a property I am selling which is empty.

My Landlord policies allow 45 days empty inbetween tenants.

Re your original question, I personally can’t see a way you could reliably do these alterations on OR.

I wouldnt wait that long either.

You are only allowed to take rent and very limited other fees from tenants. They would therefore have to have the keys and full access to the property at a reduced rent and you would have no access to it. This doesnt sound like a good plan to me.

What about council tax for your void period, who will pay this? Openrent’s contract is fixed but you can add clauses in a section at the end of the contract. You dont have to use Openrent’s contract but probably wont be able tobuse the Rent Now service.

I would personally not wait that long as its a lot of potential rent lost and additional expenditure but obviously if you are happy with the risk of them backing out and not having the rent for that period, thats up to you.

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