Standing Orders/Direct Debits/Faster Payments Scheme

[swalker]

Hi,
It has just come to my notice that the previously working stranding order, has stopped ..... lack of funds in the tenants account.
He has paid the back month payment by cheque! Guess what .... it was made of rubber (suprise, suprise).
A tenancy agreement is in place, as is insurance for the rent (not the 1st month), so, questions.
1. When do my requests for payment become harassment?
2. I can give him notice now, but how can I recer my cash?
3. What about court orders and eviction, if it comes to that.

I have rented out props. for a while, this is the first real problem.
Any help much appreciated.

steve

[morgans1]

It's ok to set up a standing order with your tenants but by doing it this way you are letting them have access to your 'sort code' and 'account number' and 'branch address'. I would recommend collecting the rent for the first 6-12mths as (a) you will get to know them a bit better (b) it gives you chance to inspect the condition of your property while collecting it. Then after that if you feel you can trust them, fine.

[Ericthelobster]

It's ok to set up a standing order with your tenants but by doing it this way you are letting them have access to your 'sort code' and 'account number' and 'branch address'. I would recommend collecting the rent for the first 6-12mths as (a) you will get to know them a bit better (b) it gives you chance to inspect the condition of your property while collecting it. Then after that if you feel you can trust them, fine.But don't you realise that every time you write a cheque to somebody, you are also providing them with all that information anyway? I can't say I've ever heard the advice "never give a cheque to someone unless you really trust them"!

In any case, presumably the tenants have been properly "vetted" before moving in, so they should be far more of a known quantity than many persons who you probably write cheques to. I consider giving a stranger the keys of my £100K house to be far more potentially risky than giving them my bank account details!

(Personally I always insist on rent being paid by standing order; I wouldn't have it any other way. Somebody else made a very valid point about ensuring the s/o is actioned very shortly after the tenant's salary is paid; that way it hits when their account is at 'fullest'; so least likely for the s/o to be 'bounced'.)

[morgans1]

Fair point, each to their own I suppose, I happen to use a combination of both, but with new tenants I always collect manually, I like to see the property is been looked after over a period of time. And with reference to bank details etc. ID theft is a nightmare!

[TWR]

My tenants rent is being paid for by one of the tenants parents who live in Dubai. How would it be best to set up a standing order?

Should I just give them my bank account details for them to set up the standing order themselves, or should I send them a standing order mandate that they can complete and send to their bank?

I've never seen the point of a paper standing order mandate. Is its purpose just to instruct their bank, or does it serve any other purpose? In reality the same process can be carried out by online banking? Just wondered if it was a purely administational procedure and if I would be missing out if I didnt use one.

[jeffrey]

1. Obviously, be careful about providing your Bank details to anyone else. Are you fairly sure that they are trustworthy people and not fraudsters?
2. Best not to e-mail details, as the details could be intercepted.
3. Why not ask your own Bank for guidance? Perhaps it could send details on a Bank-to-Bank basis.
4. Remember that the payer can always revoke a Standing Order mandate. For benefit of any novices:
a. STANDING ORDER: payer is in charge; instructs own Bank to send to payee's Bank; whereas
b. DIRECT DEBIT: recipient is in charge (so has to comply with Bank of England indemnity rules- only major companies can use service as payees); instructs own Bank to collect from payer's Bank.

[TWR]

Thanks for that. Yeah I'm sure they're not fraudsters. Although my details could equally be intercepted by post, I'll talk to my bank.

My main concern was the international use of standing order mandates, is this likely to be recognised abroad? I'd assume so...

[jeffrey]

Thanks for that. Yeah I'm sure they're not fraudsters. Although my details could equally be intercepted by post, I'll talk to my bank.

My main concern was the international use of standing order mandates, is this likely to be recognised abroad? I'd assume so...
I suppose that a Standing Order can operate for a non-UK person. That seems to be one benfit of the IBAN numbering scheme; see a previous thread (on FINANCE forum) which I started about this topic.

[TWR]

I spoke to Halifax and they said there wasnt any other way of doing it, so I'll probably create a standing order mandate and email it to them. They said it wouldnt be a problem setting up one from abroad, although the payers bank may charge them if they are not international such as HSBC.

[Surrey]

One of my former tenants was a student from Portugal, and his parents paid his rent from there, regular as clockwork, direct into my bank.

Clearly you are going to have to give a tenant your bank details if you want them to pay that way, so apart from the possibility of your details being intercepted in the post or e-mail, I don't see there's a problem. Saves on having to muck about with non-sterling cheques where you'd have to pay it in and meet bank charges too.

[jeffrey]

TWR: will remittances from Dubai be in:
a. £sterling; or
b. other (e.g. Dubaian) currency, in which case extra bank fees might be levied as Surrey mentions?

[Surrey]

Doesn't really matter, I would say, as it is usually stated that "the sum of £XX must be paid into the nominated bank account", not "the sum of £XX minus bank charges". Check the wording of the agreement.

[mrraybarton]

I always have a bank standing order arranged from my tenants. I cannot understand why they take so long to transfer particularly if the date for payment falls on a Saturday. I am checking my internet bank account sometimes as long as 10 days after and they are not paid in. i have spoken to my own bank about this and they say they should be in my bank within 3/4 days .How long should they take and how long are other landlords experiencing.:confused:

[Ericthelobster]

About 3 days is the norm... however I think it may be a lot longer if the originating account is not with a conventional clearing back, eg with a building society... could that be the case here? #

If not is your tenant simply actioning a manual bank transfer each time, at a date to suit him - can your bank confirm whether it's definitely a standing order?

[jeffrey]

Yes. A standing order payment takes no longer than clearing a cheque; really, it ought to be much quicker. Do the tenants pay the s/o from a non-standard Bank (or from a Building Society)? If they and you are using "high-street" major Banks, the delays are incomprehensible.

[mrraybarton]

Both banks are national banks I have copy of standing order mandate. My ( Usually efficient ) bank cannot see the problem.I have had 2 previous tenants . New tenant has excellent bank references and excellent salary with no other outgoings I have viewed bank statements. I do not like chasing new tenant as i do not think it is their problem but it is the not knowing whether payment is going to be made at all when it is overdue. Last 2 tenants were bad payers.

[rigsby2008]

The agent who let my property has set up a new standing order to take the rent from my tenants account on the 11th of each month.

I am still waiting for this to arrive in my bank account (5 working days now) is this too long?

I have called my tenant (3 times) who says he will speak to his bank (which is a building society) and see if they have taken the cash. But he hasn't done this as yet and I don't want to keep hassling him as it may not be his fault.

Any sugegstions?

[rigsby2008]

How long does it take for a standing order to clear? leaving a building society current account and being paid intoa barclays current account. So far it has been 5 working days and no sign of it. is this normal?

[jeffrey]

So the money has to pass:
a. from T's account to A's; and
b. from A's account to yours.
Each is likely to take 3-5 working days, and the Building Society's transfer out might take longer because the Society probably uses a Clearing Bank for funds transmission.

[rigsby2008]

although the agent set up the SO they set it up to leave the T account and go directly to mine.

So bearing in mind it left T on the 11th is it now unacceptably long for it to arrive in mine?

[SALL]

How does a Standing order mandate work?

Once the tenant has signed the mandate, does it need to be sent to the tenant’s bank for them to setup the standing order?

[jeffrey]

Assume person P (payer) wishes to pay person R (Receiver). Each has a bank account, at PB and RB respectively.

Standing Order
1. P signs mandate or gives PB instructions by another acceptable method.
2. P sends/gives mandate to PB.
3. P tells PB to send a fixed amount, stated in mandate, to RB every week/month/year/etc.
4. P can cancel this at any time.

Direct Debit
1. ONLY major financial institutions can operate this as R, because they have to give various strict undertakings to Bank of England.
2. P sends/gives mandate to R.
3. P signs mandate to tell PB to send an unspecified amount to RB every week/month/year/unspecified period.
4. P can cancel this at any time.
5. R must tell P in advance if amount/collection date is changed.

[jeffrey]

Wickerman: As fraudsters are better at fraud than both of us put together would be, let's just minimise risks!

[ConcernedTnt]

This is my first visit to the site and I'm hoping for some advice before I tackle my estate agent this morning.
To cut a long story short I am a student tenant with a short assured leashold. Everyone in the property has their own individual contract.

Shortly after signing paperwork to secure the room I was asked to sign a standing order form. I did so and to my error didnt obtain a photocopy of it. The estate agent sent this to my bank. A few weeks later I was told that my landlord's bank details had changed so a new standing order would be needed. The form had a box on it which could be ticked to instruct the bank to cancel previous arrangements with this person. I ticked that and the estate agent said she would send that off that afternoon and the previous one would be cancelled.

I discovered yesterday that the initial standing order had not been cancelled and two lots of rent had been taken in error. I called my landlord and discovered that the initial standing order was made out to someone he has no knowledge of.

I was therefore asked to sign a standing order that was not associated with the property. The bank said because I signed the form they cant retrieve the funds because they were authorosed.

Does anyone know where I stand in terms of my estate agent? They've been pretty incompetant to date!

[Ericthelobster]

Shortly after signing paperwork to secure the room I was asked to sign a standing order form. I did so and to my error didnt obtain a photocopy of it. The estate agent sent this to my bank.
For a start, contact your bank and explain what happened - ask them for details of the original standing order - ie, the account it was paid into and ask them for a copy of the form you signed - they will have retained it. (Incidentally if you google for the sort code of the fraudulent account concerned, you'll get the address of the relevant bank which might help later).


A few weeks later I was told that my landlord's bank details had changed so a new standing order would be needed.So who told you this? Who 'discovered' that the details had 'changed'?

Clearly you need to have a firm discussion with the agent. Most likely they've copied down the wrong details on to the original form by mistake, which means they should know whose account it was, and where the money went (probably another landlord) and should be able to retrieve it relatively easily. The more sinister (and less likely) explanation is that it was a deliberate fraud by someone working at the agency.


Does anyone know where I stand in terms of my estate agent? They've been pretty incompetant to date!If they don't refund you PDQ, sue them (small claims court).

[justaboutsane]

It could be that your money is sitting in a suspense account so you need to ask your bank to put a trace on the incorrect Standing Order.

To be honest I would not sign anything unless it was fully completed and I had checked the details. The agent has been very negligent. I always used a preprinted standing order form that I gave to tenants to sign and return to me. That way no changes could be made without the tenants signature and everyone knew it was all above board.

[jeffrey]

Remember that, for a Standing Order, it's the payer who controls everything- so the payer should have:
a. told his/her own bank, direct, to cancel SO1; when
b. payee was given SO2.
Payee cannot cancel SO1.

[SALL]

Do you guys know how many days a Standing order payment takes to reach the receivers account?

If the tenants account has a standing order to pay LL on the first of a month, roughly when will this money show up in LL's account?

[Sorrel]

I usually get it set up to debit the tenants account 3 days before the rent is due as it takes anywhere between 1 - 3 days to turn up.

[jeffrey]

May now be quicker, as more Banks adopt the Faster Payments Scheme.

[potatopete1]

The faster scheme should be same day, although I've always found the normal rate to be 3 days.

[mind the gap]

The faster scheme should be same day, although I've always found the normal rate to be 3 days.

Funny how they can debit your account instantaneously.

[Paul_f]

If you want your tenant to pay the rent so that the landlord receives it in his bank account on the day that it's due then make sure you use wording such as "the rent is due on...................in cleared funds" in yout TA which means that any standing order should be dated no later than 25th for monthly payments due on 1st of the follwoing month; I say this because February has only 28 days most of the time.

[Ericthelobster]

May now be quicker, as more Banks adopt the Faster Payments Scheme.Yes I noticed received a rent payment the other day two days earlier than usual because the tenant's bank seems to have just adopted Fastpay.

[potnewagent]

hi there,

I would like to find out how agents set up rent payments, if you are managing a property for a client do you as an agent set up the standing order for the tenant or do you request that the tenant sets this up themselves to your account? I have read conflicting reports on the net as to how these are set up, it looks to me that either way is acceptable?

how do you do it??

what do you think the best way to do it is??

many thanks & happy new year :)

[jta]

Hi potnewagent, Jeffrey posted this a few weeks ago, it tells you all you need to know really.



Default Standing Order/ Direct Debit
Assume person P (payer) wishes to pay person R (Receiver). Each has a bank account, at PB and RB respectively.

Standing Order
1. P signs mandate or gives PB instructions by another acceptable method.
2. P sends/gives mandate to PB.
3. P tells PB to send a fixed amount, stated in mandate, to RB every week/month/year/etc.
4. P can cancel this at any time.

Direct Debit
1. ONLY major financial institutions can operate this as R, because they have to give various strict undertakings to Bank of England.
2. P sends/gives mandate to R.
3. P signs mandate to tell PB to send an unspecified amount to RB every week/month/year/unspecified period.
4. P can cancel this at any time.
5. R must tell P in advance if amount/collection date is changed.
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[johnboy]

We use our own template for the standing order and get the tenant to sign it and take it to the bank ourselves (so we know it has been done) I also keep a copy so to have their bank details on file.

[potnewagent]

We use our own template for the standing order and get the tenant to sign it and take it to the bank ourselves (so we know it has been done) I also keep a copy so to have their bank details on file.

Thanks for your response, do you actually take them into the appropriate bank or post them?

[jeffrey]

Back to the thread topic: how are Standing Orders settling-down as the Faster Payments Scheme spreads to most Banks?

[VikG]

johnboy, i was unaware that we can take standing order mandates to the bank ourselves as landlords. I thought only the tenant could present it to the bank. Or have i read your post wrong? I have been getting my tenant to take the form to the bank and setup the standing order.

[jeffrey]

johnboy, i was unaware that we can take standing order mandates to the bank ourselves as landlords. I thought only the tenant could present it to the bank. Or have i read your post wrong? I have been getting my tenant to take the form to the bank and setup the standing order.
If T signs a Standing Order mandate on his/her own account, it makes no difference precisely who takes/sends it to T's bank.

[magictorch1976]

It's interesting to note and and tenants really should discuss this with their property agents or landlord that some banks are members of the FastPay system and therefore, money transferred by standing order can hit the receiving account in around a maximum (usually) of two hours.

It's amazing how many letting agents have not appeared to have updated their policy on the standing order having to leave your account 3 days before the due date upon the introduction of FastPay.

Not all banks are members of FastPay. You will need to see if your bank offers this service and indeed, if the receiving account is a member of the FastPay system. To assist:

http://www.apacs.org.uk/sortcodechecker/index.html

will allow you to enter the destination sort code to see if it can receive FastPay payments.

If your bank offers FastPay and the destination bank receives FastPay, technically you can arrange for your rent payment to leave your account on the day it is due to the landlord or letting agent. It therefore spends 2-3 days more in your account, earning you (probably minimal) interest but every little helps in this day and age.

Hope this is a useful pointer. I am current in the process of changing tenancy and have just had this discussion with the new letting agent who were trying to insist I must have it come out my account 3 days before it needed to be there and she had never heard of FastPay until I explained it to her :-)

REMEMBER, CHECK THAT YOUR BANK USES FASTPAY AND THE DESTINATION ACCOUNT CAN RECEIVE IT OTHERWISE, IT WON'T WORK AND YOU WILL BE LIABLE FOR YOUR RENT PAYMENTS BEING LATE!

Cheers

[jeffrey]

The only problem with Faster Payments Scheme (part of BACS, whether standing orders or bill payments option selected) is that- despite the speed- payments can be recalled for up to six days after arrival! The only non-recallable system is CHAPS, unaffected by FPS.

[Esio Trot]

Plus many banks have monetary limits.

The worst IIRC is Nationwide: they will only put payments through FPS if they are under £10; Alliance and Leicester Commercial Bank has a limit of £250.

[jeffrey]

I was going to add, further to my last post, the effect of potential recall.
An FPS recipient (e.g. Letting Agent who receives T's rent) should therefore not pay-out (e.g. to L) until after the six days of jeopardy.

[teeps]

Why don't you get the tenant to pay you and let them sort out with the parent in dubai about reimbursment?

[cymro123]

Is there any need to have more than the sort code and account number on a Standing Order Mandate to uniquely identify the source and target bank accounts?

[jeffrey]

Is there any need to have more than the sort code and account number on a Standing Order Mandate to uniquely identify the source and target bank accounts?
No, but the recipient creditor (C) may need the sender debtor (D) to quote C's reference/ledger/customer number for D- or else C might find it difficult to post the funds internally for the benefit of D's ledger.