Receiving 12 months rent in advance

19
Found 24th Mar 2016
Hoping fellow landlords can help me here, I'm currently renting out my flat and have found a good tenant who wants to pay the 12 months rent in advance. I thought I would receive a large lump sum minus Letting Agent fees in month one. however I have just received the following from The Letting agent:
As the tenants will be paying their rent for the full tenancy term in advance, we must point out at this stage that we are legally bound to retain these monies in full from the outset of the tenancy and then despatch individual payments to you on a month by month basis as per the agreed monthly rate contained within the relevant Tenancy Agreement.
I'm not too happy about this especially if all the money is put in the Tenancy Deposit Scheme and what if the Letting Agent ceases trading?
Any thoughts on the above or is this standard practice?
Thanks in advance
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"Legally bound" under what agreement? I would hazard a guess that no such stipulation exists under your terms of engagement with your agents, but without there being a standard form of contract anything goes. What precisely does it say?

What would they say therefore if you insisted the monies were held in an interest bearing account for the duration of the suggested period as a consequence of the opportunity cost of not having access to the money?
I'm not a landlord but that sounds very unfair.

The letting agency will just have the money sitting in an account somewhere earning some interest which they will, of course, never give to you.
That's what I'm thinking. I've looked on some of the landlord forums etc and can't find any legal legislation. I've used this agent for many years now and they are the leading agent in my high street. having a large lump sum now would be very handy right now and also negates any worries about non-payment. Just wondered if anyone else has had a similar scenario. The Tenacy agreement is currently being drawn up so any advice appreciated.
Do you have a contract, if so what does it state?
I assume that you have signed an agreement with them, therefore you need to read over the terms and see if it is stated that they withhold the funds in such circumstances. If it states no where in the agreement then you also need to ask why they are legally bound.

In the event that they cannot provide reasonable evidence that they are legally bound and there is no such stipulation in the terms I would write to them and request that the funds are released minus the agreed the letting agents fees of course.
Toptrumpet

That's what I'm thinking. I've looked on some of the landlord forums etc … That's what I'm thinking. I've looked on some of the landlord forums etc and can't find any legal legislation. I've used this agent for many years now and they are the leading agent in my high street. having a large lump sum now would be very handy right now and also negates any worries about non-payment. Just wondered if anyone else has had a similar scenario. The Tenacy agreement is currently being drawn up so any advice appreciated.



Consider the tenancy agreement as merely a document on what both parties have agreed to adhere to fit the duration of the AST.

If the agents are using it to restrict your rights then that's improper. If they are using your own terms of engagement then that's a different matter.

While you've got the chance, I would make it clear that if they involve themselves in a matter that doesn't directly concern them, i would make them aware you'll take your business elsewhere.

In all honesty, the only concern in all this is with money laundering regulations. I'm surprised they haven't flagged that up to be honest and instead focusing on the rights to receive the rental income (which is and only ever you).
Tell them to get lost and do it privately
Mods are moderating my messages so they may appear late.
Just rang the Letting Agent, they too were under the impression that the money would be paid in one large lump sum in month one. The email with the condition looks like it was created and sent by someone at their Head Office and could have been copy and pasted from another email? Branch manager to investigate and call me back.
(Just going shopping now so may not be able to update you further until later on today)
I take it will be a standard 6 month tenancy agreement initially then with the option to extend?
If so the agency is safeguarding the tenant, if they decide to leave after several months, it will be easier for them to return unused rent.
Ask to see where this money will be held and proof of transfer. If agency goes belly up you will be coveredd by the independent company holding the funds. The agency will not gain financially from the money
Panic over. Went into the Branch and apparently this clause only takes effect when the agent is managing the property and as I am only employing them on a letting only basis the full twelve months is due to me less their commission in month one. (They included the paragraph in error).
Happy Days
Thankyou everyone for your answers.
In future, open rent is a good option. Got ten enquiries and a let during my 5 day trial period (also got an equal number of enquiries with 2x newsagent window adverts).
You have to do the listing (and photos) and viewings yourself, background checks and lease contract, but you save bucket loads.
They offer a lot of reasonably priced extras (everything from professional photos to epc checks).
I read about them here and just used them. have been very impressed.
They list on rightmove (you need to upload documentation proving you're the owner), zoopla and gumtree.
Not suitable for every landlord eg busy ones or those that live far away, but great for others.
Toptrumpet

Panic over. Went into the Branch and apparently this clause only takes … Panic over. Went into the Branch and apparently this clause only takes effect when the agent is managing the property and as I am only employing them on a letting only basis the full twelve months is due to me less their commission in month one. (They included the paragraph in error).Happy Days Thankyou everyone for your answers.



Good stuff.

But frankly, their claim that there is such a para for management is ****. Perhaps they retain a float for repairs, rates, utilities etc. but not a full term's receivables.
Do you have a break clause? What if the tenant is troublesome? Only asking out of interest (I saw a prog recently where the house was being used as a brothel..)
Yes,I have a break clause. The short term tenancy agreement is for a 12 month period with a 6 month break clause. I've got a few properties and have been a landlord for around 10 years. I always use the same Letting Agent and we have a good rapport. It is unusual for a tenant to pay in advance in one go. I usually do the viewings so that I can get a feel about the tenants and then can make a bit more of an informed decision. Unfortunately I have been on holiday and the Letting agent did this viewing and so I can only go on what I've been told. Apparently it is a mature gentleman who is selling the the family home about 10 miles away. He has a longstanding job in London earning in excess of 80k a year and wants a new start. I assume it's a divorce and that the conditions could be that money was set aside for him to rent for one year and therefore he wants to pay in one go. he can easily afford the £1350 monthly rent. He has no dependants, a non smoker and has no pets. It can really be pure luck who you rent to but I think the Letting agent has shown due diligence and I have to be positive. I have been caught in the past where the tenant had a 16yr old daughter, lost her job and started claiming housing benefit (without my knowledge). Arrears started almost immediately and yes I had to instigate eviction proceedings, but with a child being there it was a different ball game. My husband refused to believe her flim flam and we managed to get the housing benefit paid direct to us (although we were out of pocket). Fortunately she did a moonlight flit and we got the apartment back in good condition. We just put that down to experience and moved on.
Unfortunately most websites are geared up to tenants rights and what they should do to resist eviction and remain in the property for as long as possible. The Housing Department policy is to tell tenants to remain until the eviction date and then come back. The law is on the tenants side and forget that non-payment of rent affects Landlords severely as they still have to pay the Buy to Let mortgage without income to do so.
^^i take it you dont do tenancy sustainment with your tenants?

WDTV123

^^i take it you dont do tenancy sustainment with your tenants?


What's that?
Imsure theres more to the story and the above is a summary.

Tenancy sustainment is helping tenants keep their tenancys and also at times of difficulties and support them.
Edited by: "WDTV123" 25th Mar 2016
I too haven't heard of tenancy sustainment. It all sounds very laudable, however I am unemployed with 2 children where my ex-husband only pays £5 per week maintenance as he also is unemployed at the age of 59. I managed to buy the flat when I got divorced after 18 years from the proceeds of the family home when it was sold. I have a large Buy to let Motgage that still needs paying if the tenant fails to pay or not. I get a small amount of profit after agents Letting fees, services charges, ground rent, insurance and repairs which enables me to pay for my children. When push comes to shove I need rent on the flat otherwise I won't be able to pay the mortgage, fall into arrears, get repossessed, get CCJ's for unpaid service charges and my credit rating will go through the floor and possibly lose my own home. Unfortunately my circumstances mean I could not afford to support a tenant financially or emotionally in their times of difficulty.
I think tenancy sustainability is provided by Housing Associations rather than Private Landlords as non-payment of rent is factored into their operational costs and ethos.
Edited by: "Toptrumpet" 25th Mar 2016
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