With this new tenants fee act can I still charge new tenants the first months rent in addition to the security deposit? I will be not charging a holding deposit.
Good morning. Yes you can.
That’s what I thought but it wouldn’t be seen as a prohibited payment or holding deposit which will mean the maximum one weeks rent would it as they are making these payments to me before the contract is signed, the payment will be made today & contract signed tomorrow but tenancy doesn’t begin until end of the month?
Sorry see what you mean now.
I believe contract has to be signed first before you take the deposit and first month’s rent under the new prohibited fees rule.
If there’s anyone else who can confirm as I’m not an expert.
Holding deposit can be taken when you have selected the people to be your next tenant while doing all the check, usually take a week or two depends on third party’s response time. Holding deposit is no more than a week’s worth of rent amount. If they pass the check, the holding deposit will be form of part of their security deposit.
I usually wait for the security deposit and first month rent in my account before signing the contract with them. Otherwise, they will get the contract and can stop paying you anything. You have go through legal system to get them out.
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I am not taking a holding deposit only the first months rent & a security deposit & this will be before they move in & sign the contract, so with the new tenants fee act is this still ok as I don’t want it to be seen as a holding deposit where you can only take the deposit & one weeks rent?
Just looked it up and it said security deposit and first month’s rent cannot be taken before signing the contract due to the Tenant Fees Act.
If money is taken before signing contract it’s seen as s holding deposit.
But obviously the whole amount of a month’s rent and a security deposit would equal more than the holding deposit which a landlord is allowed to take, which is only a weeks worth of rent I believe.
So that could surely put you at risk of falling foul of the Tenants Fee Act.
Got the information from ARLA.
I dont see how the first months rent and security deposit can be classed as a fee. I take both and sign the contract in the same 5 minutes . No Landlord in their right mind will sign the contract and then ask for the deposit and rent after. PS I never take a holding deposit and my next tenant will pay no deposit as I have had her as a tenant a few years ago and she is first rate
Hi Colin,
Definitely said that on a few sites including OpenRent.
Think the idea is the tenant has to be allowed to know the Terms and Conditions beforehand and sign to that effect before handing over deposit and rent.
I assume the landlord can then ask for deposit and first month’s rent and when that is received the LL can then sign the AST and provide copy of Tenancy to tenant?
Yes I provide a copy of the tenancy agreement and ask are they happy with it but I have not signed it at that point, then if they are happy I take the monies and we sign. Is that what you mean?
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Yes that’s exactly it!
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I do what colin does as well.
I will send unsigned AST for them to review. If they are happy with it, pay the first month rent plus full deposit(or remaining the deposit if they paid holding deposit), return signed AST with their sign. Then I check money in my account, then sign my part, email them the both signed version of AST.
Yes, seems that the order things need to be in.
Can’t just take the deposit and rent first as this counts as a prohibited fee.
Ok so just to clear say my tenant is moving in at the beginning of next month. I can take the first months rent & deposit anytime from now until then providing we have both signed the contract straight after they’ve paid and this will not end up being seen as a holding deposit which as said before I do not ask for?
As I understand it:-
The tenant is sent the contract to read and sign.
Tenant returns signed Tenancy to you.
Then pays the deposit and first month’s rent.
You then sign.
You then send tenancy agreement to Tenants.
You must NOT take the deposit and first month’s rent BEFORE tenant has read through the contract and signed as this would be seen as s prohibited fee and you would be fined.
That’s what I understood from ARLA, The Landlords Zone and OpenRent. I’m not any sort of expert though.
But expect Sam Open Rent Staff will be able to clarify for you on Monday.
No one should sign a contract before they have read it , landlord or tenant… It would be prudent to get them to sign a seperate letter which states they have read thru the contract before they signed it and paid any money over. (cash of course , NO cheques)
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