Standing Orders are instructions (The Standing Order Mandate) given to a bank or building society to make payments on a regular basis, usually monthly in the case of rents, to a specified party's (the landlord's) UK bank or building society account.
Any person or company with a current account at a bank or building society in the UK can give a standing order instruction.
As far as landlords and letting agents are concerned, standing order payments are the best thing since sliced bread. This is because they make the process of rent collecting trouble free, secure and save a lot of time.
Unless you are operating at the "bottom end" of the rental market, where rents need to be collected in cash by tramping the streets, standing order payments are a must.
The Standing Order is similar to a Direct Debt, except that the recipient (landlord) does not have the ability to change the payment amount, as is the case with Direct Debits. In the case of rent, the tenant instructs his bank by means of the standing order mandate. This states the amount is to be paid and when it is to be paid. If there is a change in the rent amount, the tenant will be required to instruct his bank of the change by means of an amended standing order mandate.
The bank or building society will, on the day specified in the order, debit the tenant's account and transfer the money through the BACS bank payment system to the bank or building society account of the landlord.
Launched on 27 May, 2008, Faster Payments is a ground-breaking new system specifically designed to speed up Standing Orders and sterling payments made either online or via the telephone. The system, founded by 13 of the UK's largest banks and building societies, allows near real-time (within a few hours) payments to and from participating member banks. Benefits include:
Banks and building societies will check that funds are available in the payer's account before crediting the landlord's account. The payments enter the automated clearing system known as BACS. The payer's bank submits the instruction, the payment is processed and should reach the landlord's bank within hours.
Most current account customers do not pay any charges for standing orders.
Rents are never late being paid by standing order and landlords are warned immediately there is a problem. If a standing order rent payment is not made, it usually means there's a serious problem and one which the landlord can get onto straight away.
With Internet access to accounts the landlord can now monitor when payments are made, or not, as the case may be