by Ed Firmin
Posted on Friday, October 9th, 2015 at 10:00
Competition is high in the Canterbury student property market, and some properties are so highly desirable, that you can practically see the steam from tenants rushing to lay down a deposit.
In a market this competitive, some tenants will try and do what they can to try to get themselves on the tenancy agreement ahead of any other interested parties. So they offer the incentive of paying x months’ rent upfront. What landlord wouldn’t love that?
In some ways, it sounds great, if students overspend, it doesn’t mean they can’t pay their rent, and the landlord can relax because they’ve got three months’ worth of rent in the bank (and they can book their summer holiday nice and early!)
But are there any disadvantages of having tenants pay up front? Should you encourage it?
Worst case scenario, tenants use this as a ploy to keep the landlord away. Fine, but if they’re trashing the place, then you might not know about it.
You also have to be careful if you accept rent in advance that it’s not classed as a deposit, in which case, you have to put it into a deposit protection scheme. So if you do go down this route, then you have to ensure that it’s stated in the tenancy agreement that it’s rent advance and not a deposit. The Residential Landlord Association advises that landlords take a separate deposit in addition to the advance rent, which then goes into the Deposit Protection Scheme as normal.
Why? Because there have been a few cases where tenants have claimed that advance rents were actually deposits and so were trying to claim this back at the end of a tenancy.
There has been, and still is, some confusion around this situation, disputes can easily rise, misinterpretation of conversations, wordings in contracts can be debated.
So what looks like something which could benefit landlord and tenant could actually end up being rather costly for both sides.
So my advice? Just stick to the normal month’s deposit and month’s rent in advance formula. It works for everyone, all parties know where they stand, and there’s no room for misinterpretation.
If students need to plan their budget, and they really do want to put their rent aside, it’s better kept in a bank account with a standing order for each month’s rent, and then their parents keeping the card so they can’t get access.
Landlords, you might have to save up and book your summer holiday when you can afford it!
If you’d like some advice on whether or not to accept rent advance, please get in contact, and we can go through the pros and cons together.