Updating post from Reddit.
https://theindependentlandlord.com/rent-in-advance/
Can anyone confirm that this now means that a tenant cannot offer six months rent in advance? (for example if they have a CCJ) and conversely, a landlord cannot make such an demand?
Thanks
It means those tenants are shit out of luck and people need to start taking their finances more seriously. Just going to add to more problems such as homelessness or crime.
You know who else is shit out of luck? International students, international workers etc
Yeah although I can see a return of employment based housing like they used to have. It will probably also force the students to fill the empty student flats that all these investment funds bought. They are around 20-40% full but if students can't rent private it will force them to pay extra and fill the student accommodation which are normally far more expensive to let. Sort of looks like policy is only helping corporate landlords.
Or lower the number of international students coming to the uk (impacting unis). Had the flats been a penny more expensive, i likely would not have been able to afford living in the uk as a student - ik many who would have been in a similar position. Sure some of the millionaire kids would still come, but the middle class taking loans from their home countries sure as fuck would not
Not a landlord here but this is addressing something that's become a serious issue in London. I'm sure it will have some repercussions but landlords in London have been demanding at least 3/4 months up front in rent to rent a property from anyone as a form of competition. It's made it practically impossible for anyone without sizable savings to rent a decent apartment.
Why? Would love to hear your reasoning.
What landlord would risk ccj over someone without? It used to be that people with ccj could offer 6 months/12months rent up front to give them a chance of persuading a landlord to look past a ccj but this is coming to an end so I doubt any landlord would bother risking it now. So where do these tenants end up going if every landlord starts to say sorry no ccj tenants only? I guess family would put them up in some cases but majority will end up homeless. Not sure where else someone with a ccj can go?
Thank you. I appreciate your response and perspective on the matter.
TBF the cohort of people holding recent CCJs who also have 6-10k in savings is a fairly small one!
There are other solutions there, notably a guarantor (private or otherwise) who can hold money in deposit in order to guarantee delivery of rent on schedule.
This would be a lot of extra faffing around guarantors don't usually hold a deposit of any sort. Yes things could change in future but reading about it there seems to be a lot of legal admin work around this. A lot of tenants struggle to even find a guarantor so adding complexity to the mix isn't helpful.
Sure, but I'd much rather that the rules around CCJs were changed than that landlords race to get bigger advance payments.
By making people pay their debt? You only get a ccj by owing someone money, if people manage money better they wouldn't get a ccj in the first instance. I would like to see the rules changed to where a ccj actually stays with someone until they pay it off as it gets wiped after 6 years which is pointless the only people that lose out are the people that they owe money to. Pushing more businesses into debt. I also don't agree that businesses can avoid paying debts too.
The debt isn’t wiped, only the credit report. As far as I’m aware the debt is still owed - whether it’s enforced is a different story though.
Wow I never knew that but if they haven't paid in 6 years with a ccj what incentive would they have to make them pay up?
That’s the problem really, they’re still liable for the debt but don’t have much incentive to acknowledge it if they haven’t already.
Would likely need further action such as bailiffs but I’d imagine you’d be throwing money chasing money really.
My mother is my guarantor (has been for 20 years) she does not hold any money its simply if i got into rent arrears, which i never have, she can be hauled into court along with me for claiming it back
Yes, guarantors do not need to hold money in deposit, but it's something that possibly could be done as part of a scheme to help tenants who are specifically struggling with the consequences of a CCJ.
It would be hard to navigate a 'holding of money' especially so if either party was on means tested benefits.
Yes, guarantors do not need to hold money in deposit, but it's something that possibly could be done as part of a scheme to help tenants who are specifically struggling with the consequences of a CCJ.
Not a landlord but I imagine if you have a person who wants to rent the property but they have a CCJ then the landlord isn’t going to want to take that risk. Whereas if they offered 6 months up front the risk is lower because you’ve got at least half of a yearly tenancy already
Feel bad for those not native to the UK or with bad credit history; will make them unable to get a place to live.
Unsure why Labour would do this to them.
Oh well, at least those of us with ok credit history but no lump of cash on hand will have a fair chance now. How can I as a parent and sole provider, earning minimum wage, compete when others are offering to pay up 6k in advance?
Literally. And if I had 6k in savings I'm hardly going to want to waste it on my landlord am I?
is it only good if it benefits you?
It’s better if it benefits people who need the help.
this.
Because in the current situation people without thousands in cash upfront can’t even get viewings half the time
ideology and lack of understanding at best - in cahoots with the large build-to-rent funds at worst
It means if you have a CCJ you're just going to get the 'sorry but other tenants are more suitable' line more.
Even if you have a year up front it can't even be taken.
Also if you're a recent immigrant in a skilled job and with plenty of money or a rich foreign student.
Such a stupid addition to the bill.
Or anyone with an unstable income like freelancer or contractor
Not even that. Just select the other ones.
I wonder if it will become a case of oh nice watch how about I give you 11months value of rent for the watch and oh I will take the property here is 1 month rent.
People would be stupid to do that though, as there'd be no protection of your money.
Yeah I was just thinking that but people get pretty desperate when they need a roof over their head.
You are right. As a landlord I’ve occasionally accepted 6 or 12 months up front from a slightly more marginal applicant (retirees, self employed etc.). With this change the property would just go to the full time employed couple.
The government should just stay out of the market.
Likewise one of mine is bankrupt nobody would touch them. 6 months upfront I took the risk. Best tenants ever they have been trouble free for 7 years!!
This is not a good idea.
My grandad who is 87 suddenly needed to be rehoused and independent living places all had massive queues. Viewed loads of rentals but he didn't meet affordability checks. Eventually just offered to pay 6 months up front and got accepted immediately.
No idea what we'll do if this comes into effect and he has to leave his current flat...
Be thankful in the knowledge that your misery is contributing to the destruction of the private rental sector. Why is the government destroying part of the economy when they’re trying to grow it? That’s a great question. But don’t ask them as they haven’t got a clue what the answer is, beyond some “LANDLORDS BAD. SOCIAL HOUSING GOOD” rubbish.
I see both sides of this. It's a hamfisted, idiotic response...
But something does need to be done about piss-taking landlords.
Just out of curiosity why is retired a bad thing?
Pension income is guaranteed right? They're more stable than employed people who can lose their jobs at the drop of a hat.
I was in a position when I started to rent that i was a lorry driver making decent money but because it was technically a zero hours contract the only way I could rent was by paying 6 monthly and 8 years later I'm doing the same as it suits me due to now not being able to work through disability and on universal credit, it's easier for me to pay every 6 months because i don't get enough help so have to borrow to top up before I pay my rent, if it changed to monthly I'd end up in a muddle !
This is not law yet. As the article states right at the beginning this has been added in to the current bill and may be changed or even removed before it becomes law
Why would anyone think this is a good idea? A landlord has a few perspective tenants, some with a credit history, salary records and generally not a flight or squatting risk. Others without. It might be sensible to stop landlords having credit and affordability criteria AND taking rent in advance. This seems like the worst of both worlds.
*prospective
Indeed!
But who would then insure the landlord is the issue
Sure, but it's passed the house of commons first reading and there is a decent chance this aspect of the bill will not be modified before it becomes law
Thanks
If/when it comes into law - Yes.
Paying/accepting more than 1 month's worth of rent in advance will no longer be legal.
Guarantors will however still be allowed.
That part about Guarantors is interesting. I wonder if companies will spring up to act as guarantor middlemen, taking the 6 months rent and paying it out monthly to the landlord. As always with governments distorting markets there are unintended consequences.
Yes, there are already businesses doing this for a fee.
There are companies already doing this service
I’ve never personally asked for it but tenants have asked me if they can pay up front. Usually students who get a lump sum grant. So let’s hope they can instead be financially responsible!
To people worrying about how this will impact people with CCJs, this is not a huge problem.
While you cannot pay the landlord up front (and there is very good reason for this), under this law you can set up a custodial trust - giving effectively the same end results - but without the risk of a landlord absolutely fucking someone over.
Basically you create a special kind of bank account in the tenants name, that nobody can access unless rent is proved to be unpaid, or notice to conclude the tenancy is given.
interesting
Yeah, basically deposit protection but in reverse.
What does ccj stand for?
County court judgement.
Means you owe money in a bad way.
This is going to hurt tenants more than landlords.
Absolutely everything does. Tenants are in need of housing, so landlords can pick and choose. There seems to be no legislation at all that can make the relationship "fair".
Abolish landlords could do it
I've both paid advance rent as a tenant and accepted it as a landlord. In both cases, the key to making it a secure solution for landlord and tenant was that the total sum was held in escrow by the agent and paid to the landlord on a monthly basis.
It was an equitable arrangement for both parties that enabled me to rent when I had savings but poor credit and limited income. Seems like a shame to ban them.
What's exactly the benefit here to the tenant or the landlord. Only party that wins is the agent collecting a fee or benefiting from large cash reserve earning interest.
If you go to a credit agency and ask for a credit card, or a loan, they look at your financial history and decide if you’re able to repay it. It’s the same for renting
That happens already now. That's what referencing check includes. There will still be those that are borderline pass or fail, and why rent upfront is still valuable to the tenant
Yes of course I thought you were asking what the benefit was ? It’s more security for the landlord if the applicant hasn’t got the best history of repayment or is maybe just arriving and job hunting
No. What's the benefit of escrowing. Landlord wants guaranteed rent, extra liquidity is useful too having a lump sum. Escrowing just adds extra steps for the landlord to get their rent.
For the tenant, the money is already been paid and they are bound by the tenancy to pay full rent for the term. So again, what's the benefit to escrowing.
When we moved back to the UK after a few years overseas, the landlord couldn’t credit check us, so our solution (which was accepted) was to pay 6 months upfront. We would have been stuffed otherwise. In this area a rental gets over 100 applicants, so no chance for folk in our position.
Wonder if we will see some trying to skirt it with
Rent £1,000 pcm
So 12 month tenancy
Month 1 rent:£6k
Months 2-6:£1 pcm
Months 7-12: £1,000 pcm
Who is going to enforce/challenge it
Is a tenant going to apply to a court for a refund. Would a court order the repayment of £5k and not increase the rent on months 2-6?
I can see some people trying it and tenants accepting it to get the property if they have poor credit/circumstances etc.
Could the money be put in escrow so it’s still having to be paid up front but only released as needed to a LL though? Feels like that protects both parties.
I can’t see how they could enforce a tenant offering this.
They however can enforce a landlord making this a requirement
This really does seem like choosing one evil or a different type of evil, no matter which side you land on
Why not choose neither, and go for a third option?
It's made me so mad as you used to be able to talk landlord into accepting pets by paying 6 months upfront :(
I had a CCJ when I was last looking to rent a property. Was happy to offer a few months up front as it meant we were able to secure somewhere to live.
Without that option we’d have needed a guarantor which we can’t get.
We were served an s21 at our previous address as the landlord was selling.
I’m assuming without the option to pay a few months upfront, we’d have had to have waited until the courts enforced the s21 and gone to the councils?
This ban seems like it’s going to add a lot of stress to potential tenants who have less than ideal credit scores.
There is no limit legally on this. Just paid six months up front to secure a 12 months tenancy. Standard is 6 months, 12 months or even 36 months! ( though moreso on commercial) in practice. Usually for a reference reason (I.e my income on my company is less than 2 years) As a previous landlord myself I always did a credit check and weighed up the risk - wouldn't anyone do this if one was a landlord. I agree with leniency as a tenant, but to make law fair is difficult. Landlords and tenants alike will take the biscuit given half the chance. Sadly not everyone has morals or honesty...
Lol landlord has to take in a tenant who is already in arrears what a joke
Landlord doesnt have to take anyone on, especialy if in arrears.
I dunno the article says in some circumstances under this proposal where the contract is signed but the tenant doesn't pay before moving in
I lived abroad half my life and had no UK credit history to speak of. Paying 6 months rent up front got me back in the system. This well meaning stupidity will just stop a bunch of people renting.
From working jn homelessness, mental health services and benefits, the fact that landlords request 6 months ria at times is just not realistic, especially with the out of control rents being charged
It is realistic, if it wasnt they they woudnt rent out the property time and time again. Your trying to house at-risk, high-risk tenants with no income, mental instability, no assets, living off the safety net. It should be hard to get private rentals for that tenant profile.
Your complaint should be that social housing, the type of housing designed for that kind of tenant profile is not avaliable.
I can’t believe people are complaining about this?
People will honestly just complain about anything. This should’ve been outlawed years ago!
You've not read the comments, as to why it shoudnt be banned.
Cannabis growers love the 6 months upfront rent arrangement.
I’m scared of this because being someone who is alone only way I can get a flat is 6 months in advance and I’m very vunrable I of t have no Cjjs but just no garountor
Disabled and low income households already struggle with the affordability criteria most referencing agencies use and offering upfront rent was the only way to circumvent this obstacle for them. The same for self-employed and people new to the country.
Can someone educate me as to who this law benefits and the reason for it?
As far as I’m aware the plans would allow you to accept advance rent payments however you cannot request them
Yes. I’ve never asked for advanced rent. See no need.
Yes, but many landlords may be open to accepting a tenant with poor credit if they offer advance rent?
Yeah I get why.Private landlords shouldn’t provide social housing.
In what sense is it social housing? Payment is being made, just up front rather than on an ongoing basis.
I work an unconventional job, with a feast/famine style payment situation. I've paid in advance the past decade, a few months here and there, sometimes up to a year, because monthly payments wouldn't work out for my income and savings.
How is that a social housing situation to you?
They can’t afford it. So it’s social housing.
They can afford it. So it's not social housing
So you actually don't understand the meaning of "afford" or "social housing"?
Who is "they"? My comment is about myself!
So confidently wrong.