PDA

View Full Version : Difference between deposit and rent advance?



Essex
22-04-2008, 17:33 PM
I know this may sound ignorant, but can I still ask for a month's rent in advance, and state this fact in my AST agreement or is this viewed in the same way as a deposit, i.e. it's now illegal since last year?

Ericthelobster
22-04-2008, 18:42 PM
I know this may sound ignorant, but can I still ask for a month's rent in advance, and state this fact in my AST agreement or is this viewed in the same way as a deposit, i.e. it's now illegal since last year?Yes of course - rent is paid in advance and so far the government haven't attempted to change the legislation in that regard, so how else should it be done?

Steve__M
22-04-2008, 19:00 PM
May I ask a slightly different question. The linked thread points out that if the tenant has to pay

"any sum paid by way of deposit, other than one which does not exceed one-sixth of the annual rent payable under the tenancy immediately after the grant or renewal in question."

(my bold)

it counts as a "premium" and the tenant gains some additional rights with regard to assigning or subletting the tenancy.

http://www.landlordzone.co.uk/forums/showthread.php?t=1104&highlight=rent+advance

Does anyone know if the law clearly treats differently a lot of rent payable in advance? I have a tenant who wishes to pay a lump sum of 6 months in advance (for a discount). Explanation is that he has sold up and wishes to rent till the credit crunch is over.

Paul_f
22-04-2008, 20:34 PM
Rent is rent, and any deposit that exceeds an equivalent of two months rent is considered to be a premium which could give the tenant rights to renew or assign.

If a landlord attempts to disguise any deposit as rent then it will just not get by the scrutineers of any of the deposit schemes; having said that rent in advance is clearly not a deposit.

I have decided to add on £25 per month for a flat that has become vacant rather then take a deposit and to ensure a decent guarantor is in place too. As the rent would only have been £350 pcm another £25 shouldn't be beyond somebody from whom I would normally demand £500 as a dilapidations deposit. I realise in the early stages I could lose out as I would only offer a 6 months AST initially, but after 2 years I might reduce the rent having collected an extra £600 anyway. Of course the tenant wouldn't be entitled to any rebate on vacation, but at least he didn't have to find an extra £500 for a start. I would also have the guarantor as a back-up.

Ericthelobster
22-04-2008, 20:36 PM
Does anyone know if the law clearly treats differently a lot of rent payable in advance?Well, I asked basically the same question very recently and received no response to the effect that it does - did some googling and as far as I can see from the results it's fine, providing the money is definitely all for rent.
See: http://www.landlordzone.co.uk/forums/showpost.php?p=70816&postcount=5.

Would love to know the definitive legal answer though.