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Landlords and Advance Rent Payments

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Freedom day has come and gone. For some of us it felt like a bit of a damp squib. After all, you still can't use London buses or the tube without a face mask or pop into most supermarkets without masking up. Whilst one can see the logic of what was billed as ‘freedom day’ being down played in the face of rising COVID-19 rates landlord and tenant solicitor, Nollienne Alparaque, looks at where freedom day leaves landlords.

Online and London Based Landlord and Tenant Solicitors

If you need landlord and tenant advice, call OTS Solicitors on 0203 959 9123 or contact us online

Landlords, lockdowns, the future 

A while ago we all hoped that the vaccination programme would bring an end to all restrictions and that landlords and tenants could get back to life as normal, in those longed-for pre-pandemic days.

With esteemed government  scientists talking up the prospects of further lock downs within a matter of weeks the question is where does that leave embattled landlords who have had to continue to keep their tenanted properties in a good state of repair whilst being unable to secure property possession in cases where they suspect a tenant has not been financially affected by COVID-19 but is simply using the pandemic as an excuse not to pay the rent as they could not be evicted.

Given the prospects of further lock downs (and the consequent potential impact on landlords who see money going out on repairs and maintenance with real risks of not being able to secure payment of rent or possession of property in cases where the tenant isn’t financially affected by COVID-19) is there an answer for landlords?

Advance rent payments

Some landlords are turning to the solution of asking tenants for rent in advance – not just for the first months’ rent but six months in advance. A landlord requesting advance payment on the start of a new assured shorthold tenancy agreement in September 2021 would ensure that they had rent coming in over the winter months, in the hope that the Spring will bring better times.

As a landlord and tenant solicitor I am asked if a landlord can ask for rent in advance and whether it is legal. The answer is that it is provided that the landlord or the letting agent is not asking for illegal letting fees or deposits.

Historically, advance rent payments were common where a tenant had insufficient evidence that they could meet the rent out of their income. For example, the tenant had just set up a new business so had no company accounts or wage slips.

Now landlords are particularly interested in potential tenant’s jobs with a tenant with an NHS or teaching job being highly prized. Other landlords take a more pragmatic view , assuming that plumbers and other trades will never be out of work for long in London .

Are advance rent payments fair?

Many landlords would say that asking for rent in advance is fair as otherwise they could end up in the situation where they are paying for bills and repairs to a property, with no rent coming in, a mortgage to pay, and little chance of getting swift possession because of either further COVID-19 regulations or court backlogs with possession proceedings.

From a tenant perspective advance rent payments can be a disaster if money is paid up front, without the tenant being aware that a mortgage company has started possession proceedings against the landlord because of non-payment of the mortgage. Alternatively, a tenant can regret paying rent in advance if they then find it hard to get their landlord to carry out repairs to a property. The answer is that whether rent is paid monthly or the full amount paid in advance the landlord has legal responsibilities in relation to the upkeep and safety of the property.

The alternatives to advance rent

There are alternative solutions to advance rents. For example, the use of a guarantor or insurance backed rental agreements.

The use of a guarantor is only really an incentive for rent to be paid if the guarantor has assets or a reputation to lose if the rent isn’t paid.

With insurance policies it is a question of reading the fine print to make sure the insurance cover provides the protection a landlord needs and looking at the cost of the cover. Will the premiums push up the rent to an unachievable level or if the landlord is bearing the increased overhead will the premiums make the profit margins of renting residential property too narrow.

Advance rent is one option, amongst several, being actively considered by landlords with property to let but who are perhaps understandably wary of being caught in the middle again; responsible for repairs but with no rental income from their rental property.

Online and London Based Landlord and Tenant Solicitors

If you need landlord and tenant advice, call OTS Solicitors on 0203 959 9123 or contact us online.  

Nollienne Alparaque, head of the landlord and tenant department at OTS Solicitors, will be happy to help you with your landlord and tenant legal queries.

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