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Paying Lump Sum Of Rent In Advance

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Possibly a naive question but is it possible to negotiate a lower overall rate of rent if, say, a whole year is paid in advance?

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Of course. Everything is open to negotiation. If you don't ask, you don't get. The worst that anyone can say is no. Personally I wouldn't expect much of a discount though and dependent upon where you live and demand, you may be better off negotiating the monthly rent,

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Possibly a naive question but is it possible to negotiate a lower overall rate of rent if, say, a whole year is paid in advance?

A colleague's daughter paid a year in advance and got a discount. However, she later had the washing machine go on the blink and despite a lot of chasing it took them weeks on end to get it fixed. Because she had already paid she had no leverage and they took advantage of that.

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Isn't that what the cannabis farmers do ?

:unsure:

So they think! It can make them suspicious about you. Enough for 6 months in advance? A lowly renter? Must surely be a criminal of some sort! Otherwise they'd be on the ladder getting on with their lives !

You can negotiate a lower rent by just asking for it, I wouldn't start with any payment up front. If that was step 2, Id start with 3 months. They might even prefer that to 6, less suspicious. :lol:

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Isn't that what the cannabis farmers do ?

:unsure:

And pimps.

Probably.

Or just people who want to stay for a year, sign an annual contract and are happy to pay upfront to secure a discount and save on referencing costs.

I prefer to keep it to six months in case the landlord goes bust and is repossessed.

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Possibly a naive question but is it possible to negotiate a lower overall rate of rent if, say, a whole year is paid in advance?

Try it and see. How much does your prospective landlord value peace of mind? It might depend in part on their experience: if they've had trouble with a bad tenant, it might be worth quite a lot to them.

I've done it a couple of times. In my present place, got 10% below the asking rent in a deal that included paying 6 months up front. Mind you, I had to be firm with the agent when they tried to put the rent back up to that asking price after the six months ...

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I feed at the bottom end of the market with amateur landlords who are most unlikely to pay tax etc and I have become very good over the years.
When a weekly rent has been advertised I've been able to exploit the common assumption that there are 4 weeks in a month to get a discount.
Me '£100 per week, 4 weeks per month, hmm, so that's £400 per month then?'
Lld 'Erm, yes.'
Then negotiate that down to say £375.
Pull out a roll of notes and suggest £350 per month if you pay 3 months in advance straight away. The sight of a lump of hard cash is sometimes enough to clinch a final discount.
I wouldn't like to go beyond 3 months in advance in my market. I never pay the final months rent as that guarantees return of deposit.

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I feed at the bottom end of the market with amateur landlords who are most unlikely to pay tax etc and I have become very good over the years.

When a weekly rent has been advertised I've been able to exploit the common assumption that there are 4 weeks in a month to get a discount.

Me '£100 per week, 4 weeks per month, hmm, so that's £400 per month then?'

Lld 'Erm, yes.'

Then negotiate that down to say £375.

Pull out a roll of notes and suggest £350 per month if you pay 3 months in advance straight away. The sight of a lump of hard cash is sometimes enough to clinch a final discount.

I wouldn't like to go beyond 3 months in advance in my market. I never pay the final months rent as that guarantees return of deposit.

I've used this tactic a couple of times in rental negotiations - start with saying you think the rental is worth X (where X is less than the advertised). Explain why you are lower risk than others (job, rental history, references, guarantors etc). Then if that is refused you move on to OK, will pay Y months in advance at X. Explain that that means the landlord is having less risk of rent default AND can invest that money for an extra 3-6%. Some landlords are too dumb to understand that.

I've got up to 30% off original rental prices doing the above. Note, it does mean if you move in and find a MAJOR problem you have less leverage, so I wouldn't do it if anything about the property is niggling you.

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I've used this tactic a couple of times in rental negotiations - start with saying you think the rental is worth X (where X is less than the advertised). Explain why you are lower risk than others (job, rental history, references, guarantors etc). Then if that is refused you move on to OK, will pay Y months in advance at X. Explain that that means the landlord is having less risk of rent default AND can invest that money for an extra 3-6%. Some landlords are too dumb to understand that.

I've got up to 30% off original rental prices doing the above. Note, it does mean if you move in and find a MAJOR problem you have less leverage, so I wouldn't do it if anything about the property is niggling you.

This is surprisingly similar to what I did once many moons ago in my youth, out of necessity as much as desire to get a reduction - and it worked. I learn't it from my grandfather that nothing speaks so persuasively as cold hard cash placed down on the table front of a vendor. The same has worked may times since when buying cars, etc. You can talk as much as you like and put on a good impression BUT cold hard cash speaks loudest.

I had some money saved and so was able to do it. I appreciate that today it may well be very much harder for many to do.

I actually ended up paying 9 months in advance AND negotiated a clause that had a sliding scale of how much 'unspent' rent would be returned, and forwarded onto my nominated next of kin, in the event of my untimely death. I was damned well not gonna let the landlord walk off with the better part of a years rent IF I unfortunately fell under a bus just the following week - so allowing him to pocket the rent and then rent the place out afresh.......

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Another thing I've always let landlords be aware of that I have a list of up to 20 properties that I'm considering. Realistically I'll only give up to 3 a second visit to haggle over and go for the best. There is lots of rentals round here. Make them feel like it's a renters market.

Also, as this is a student area I try to time moves just into the start of the academic year and emphasize that

if the rental doesn't go to me there's a good chance of a long void. The influx of immigrants has made this less realistic than it used to be but it's worth a try.

Edited by LeeT

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one downside of paying a lump sum to your landlord is if the place gets repossessed, would the repossessing bank honour the rental contract?

Aren't sitting tenants protected? until the expiry of the contract?

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Aren't sitting tenants protected? until the expiry of the contract?

As long as your fixed-term AST lasts you cannot be evicted from the property. However, once this expires, you right to stay in your home comes into doubt.

Steve Hilton, spokesman for the National Landlords Association (NLA), says that on the day that your fixed-term AST ends the lender (or whoever is in possession of the property) has the right to issue you with a Section 21, which is your notice to vacant the property within two months. http://www.moneywise.co.uk/home-mortgage/property-market/home-mortgage/renting/what-rights-do-renters-have-against-repossession

So if you pay a year in advance, and the landlord gets repossessed in month 6, you could be evicted in month 8 and be out of 4 months pre-paid rent. In that scenario you would have to make a civil claim as the rent would be outside the tenants deposit scheme.

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As long as your fixed-term AST lasts you cannot be evicted from the property. However, once this expires, you right to stay in your home comes into doubt.

Steve Hilton, spokesman for the National Landlords Association (NLA), says that on the day that your fixed-term AST ends the lender (or whoever is in possession of the property) has the right to issue you with a Section 21, which is your notice to vacant the property within two months. http://www.moneywise.co.uk/home-mortgage/property-market/home-mortgage/renting/what-rights-do-renters-have-against-repossession

So if you pay a year in advance, and the landlord gets repossessed in month 6, you could be evicted in month 8 and be out of 4 months pre-paid rent. In that scenario you would have to make a civil claim as the rent would be outside the tenants deposit scheme.

The scenario you paint, if I understood correctly, is one where......tenant pays 12 months rent up front (i.e. the AST is for 12 months and not the more usual 6) and landlord is repossessed by his bank/mortgage provider 6 months into the 1 year contract ? In this case, yes the tenant can certainly stay till at least the full 12 months are up - and even possibly another 2 months longer.

BUT....in practice the tenant will get to know about the landlords repossession long before the expiry of the 12-month AST and so will not renew for a second full year - and so has little risk of losing multiple months of rent paid lump sum in advance.

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When renting, anything is open to negotiation. Some landlords/agencies even advertise this. My sister had the fortune to find a landlord who had just spend a small fortune converting the old offshore Coutts head office into banker grade flats, but couldn't find buyers (at the multimilion £ price tag) or tenants. So desperate where they that they were offering 20% off for 12 months up front.

The rent was still ridiculous, but more than offset by the tax haven status of the isle of man.

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one downside of paying a lump sum to your landlord is if the place gets repossessed, would the repossessing bank honour the rental contract?

That is a possibility. If paying a large amount up front (and indeed in any event) you must check if the property is subject to a mortgage where consent is required for letting and, if it is, ensure that the consent is obtained.

There are also other traps for the unwary:

1. If the tenancy agreement is for, say, six months, and provides for six months' rent to be paid in advance, when the tenancy ends (and assuming the tenant stays in occupation etc) there will be a six monthly periodic tenancy which the tenant can only end by giving six months' notice and, since notice cannot be given on the first day of a tenancy period to end the tenancy at the end of the same period, the tenant may be committed for up to a year. You must therefore ensure that the tenancy is for longer than the period in respect of which you pay the initial rent and that the rent payable immediately before the term ends is payable weekly or monthly.

2. If the tenancy agreement provides for the rent to be paid weekly or monthly but you pay, say, six months' rent at the outset, then the position is that not all you have paid is actually rent. This is because of the rule which says that a sum tendered as rent before it is due is held by the landlord to be applied as rent but is not rent until rent day. This is not a problem so long as the landlord does not dispose of the property or fail to keep up with his mortgage payments because the money must be applied to the rent. However, on a disposal or a lender taking over the new owner or lender (unless actually paid the sum in question) is entitled to rely on the tenancy agreement and assume that rent is being paid in accordance with the agreement.

If payment is made as set out in 1 then the rent paid for the initial period is not refundable if the tenancy ends early. If payment is made as set out in 2 any part of the sum not applied as rent is refundable if the tenancy ends early.

Edited by Damocles

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