Updating post from Reddit.
I have previously accepted tenants that would not pass referencing on day one by asking for 6 months rent in advance. Think this short reel is a useful overview of the impact of RRB on this practice. Useful tips as well but means in reality I wont rent to some people any more.
Is the reel or I missing something in terms of how to make borderline tenants viable without being able to take more than a month of rent in advance?
https://www.instagram.com/reel/DMyXxiHIHjn/?igsh=MWc0a2c3dTR3YTExZg==
I heard about this, and it's definitely going to cause issues. Intentional students, poor credit rating due to blip, or an error on a credit file, etc.
What I'm waiting to see spin up now, is a guarantor service. Where the tenant pays the rent upfront to a guarantor, and that guarantor will guarantee the rent payments and effectively pay them on the tenants behalf for the first 3,6,12 months.
This would get around the legislation since the tenant is picking a guarantor service, not the landlord.
Actually a cracking idea!
And it will probably get abused in some way, just like the no deposit schemes where tenants give up their statutory protections.
I've looked into it, and it falls under FCA regulation and obviously rules on protecting client money. And the costs of working with providers for escrow isn't cheap. You could result be spending £100k a year on fees to return the service. So that needs factored into the cost
These things only work at scale but with the number of people this will affect it might still make sense for someone already in the space
Potentially. The deposit protection schemes already have the required setup to hold funds, all they need is automated payouts.
Sounds great until unscrupulous companies cotton on and start charging these people extortionate fees.
No doubt. As above I've took a look at some basic requirements and the cost to run it wouldn't be that cheap due to FCA regulations. You can't just be a self employed trader holding large sums of cash with an IOU promise. The fees to hold funds for regulatory reasons means they'll be charging £10-20 a month just to cover costs of the third parties. Add in your own website, staff, customer services and it mounts up quickly.
That’s easy, don’t take borderline tenants. Demand far exceeds supply at the moment so you can just take those with good credit and references.
You just don't let to anyone who would normally need to pay in advance. Unless you're the perfect candidate you're going to have a rought time
Jumping on this, I’m a tenant in a position where I’d normally be asked to pay extra rent up front, with these new changes can I offer to pay this instead of the landlord asking me? Or is it out of the question all together, I’ll be moving in the next few months and genuinely no clue what I can do if I can’t be accepted with the upfront rent payment, thanks in advance
You can offer but stupidly the rules seem to suggest you could then ask for it back as it will be illegal to include advance rent in the agreement.
I can only think that you’ll need to pay for a guarantor service in the future. Which isn’t cheap and benefits no one but the big financial institutions.
I should say if you are doing this in next few months it is still okay as the Bill won’t come into force by then. Existing agreements will be unaffected in this regard.
Appreciate your response thankyou, that’s put my mind at ease abit, the rent increase at my current property is forcing me to move out, hoping with a good reference from my current landlord and rent in advance a landlord will accept