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StrapInThisIsGoingToHurt

Paying Rent In Advance

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Just an idea. Imagine you have a bit of money stashed away (eg. for a deposit to FTB AFTER the imminent HPC).

You see a new place for rent - really nice, but it is £800 pcm. It's being let (not up for sale -I wonder why?) by a property developer (nice man).

You visit it. Your young lady gets all flushed and aroused. And she likes the place!

So you say to the dude, "Listen. We'll give you £450 per month - but we'll pay a full year in advance, right now. That's £5400 in your hand - NOW. You can take it or leave it. Because we've noticed that there are 650 other lovely empty appartments within a 1km radius of this leather sofa. Are you in - or are you out? I have my chequebook here right move now... let's do business!"

The blood would drain from his face, but I wonder what he would say? Nobody's lived there since it was completed 11 months ago. I reckon some of them would accept.

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I've considered using this as a negotiating tool, but at the moment the rental market is so weak that simply making low offers will do.

The trouble with this as well is that the LL has your money. Not good in my book.

He only needs to be paid monthly to compensate for his outflows. If he's cash flow negative, tough, you'll only help extend his foolish position by paying upfront.

If he goes bankrupt, you won't see your money.

There are too many idiots out there right now "into" buy-to-let.

Don't assume they will be capable of looking after your cash.

As for the "discount" you can negotiate, bear in mind you are losing the immediate use of the cash, and should be paid interest for what is effectively a loan.

So in lieu of the interest you negotiate a discount.

To me there is just too much risk and not enough upside.

I'll continue to trust me with my money.

Edited by BandWagon

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Those are all relevant points, Bandwagon. I'm just thinking that with only one year to worry about, you could bale out to another nice local new-build then, if the LL didn't honour his duties. It is only one year, after all.

But that is a good point about interest on the capital. Hmmm. The "upside" for me would be getting an £800 new-build in the centre of town, for one year, at £450 pcm. If my young lady chipped in £150, I'd only have to find £75 per week.

You've got to admit, as a short-term solution while things collapse around us, it sort of makes sense.

Not sure about the paperwork side of things. Would have to look into the wording of the receipt and contract, etc.

Edited by StrapInThisIsGoingToHurt

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Those are all relevant points, Bandwagon. I'm just thinking that with only one year to worry about, you could bale out to another nice local new-build then, if the LL didn't honour his duties. It is only one year, after all.

But that is a good point about interest on the capital. Hmmm. The "upside" for me would be getting an £800 new-build in the centre of town, for one year, at £450 pcm. If my young lady chipped in £150, I'd only have to find £75 per week.

You've got to admit, as a short-term solution while things collapse around us, it sort of makes sense.

Not sure about the paperwork side of things. Would have to look into the wording of the receipt and contract, etc.

Good topic but more importantly ... your avatar :lol: nice one :lol:

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Just an idea. Imagine you have a bit of money stashed away (eg. for a deposit to FTB AFTER the imminent HPC).

You see a new place for rent - really nice, but it is £800 pcm. It's being let (not up for sale -I wonder why?) by a property developer (nice man).

You visit it. Your young lady gets all flushed and aroused. And she likes the place!

So you say to the dude, "Listen. We'll give you £450 per month - but we'll pay a full year in advance, right now. That's £5400 in your hand - NOW. You can take it or leave it. Because we've noticed that there are 650 other lovely empty appartments within a 1km radius of this leather sofa. Are you in - or are you out? I have my chequebook here right move now... let's do business!"

The blood would drain from his face, but I wonder what he would say? Nobody's lived there since it was completed 11 months ago. I reckon some of them would accept.

Nice idea but a bummer if the property gets repossessed.

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Guest Guy_Montag

I definately would consider this, though I might be tempted to do it in 6 month slices.

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Er - OK I admit I hadn't considered reposession. Fair point, Dog. Realistically, how long, though, before the bailiffs actually come and chuck out the tenant?

And I like the idea of 6-month slices, Guy: although the good thing about a year is that it makes the initial cheque that you hand over sound much more exciting to the frazzled BTL. He's probably going to use it to go on a beach holiday and pretend he's a property millionaire! But who cares? We don't, because in a year, we'll move on to the next nice new-build and do it all again.

Hell, this is really making me think!

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Guest Guy_Montag

I can see your point. Well it's a risk, i would seriously consider going for it. I almost did (but I found a decent place at a good price). If you really want to get them watering at the mouth - bring a bag of tenners. Then shop them to the IR when you move out.

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I STR'd in November and negotiated a "6 month up front" deal with a local Agent which I've just renewd. The agent likes it (why am I not surprised) and I'm of the opinion they're acting on my behalf rether than that of the Landlord! :rolleyes:

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I tried your tactic when negotiating on my nice brand new new-build and although the LL was keen he wouldn't come down to a level that I considered warranted the risk. If you can get your LL down from 800 to 450 then I would say you have got a good deal - I would anticipate that would be a tough one to negotiate though.

I definately wouldn't go more than 6 mths in advance...very risky....you will be the last one to know that your LL is in default and up for re-posession. How do you know he isn't already going through proceedings. Also if the LL does take £450 in lieu of £800 it would indicate that they are probably a bit clueless or desperate and hence more likely to get re-posessed.

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I bet they are acting on your behalf, Cupid. They are probably delighted to have someone in there at all, let alone paying 6 months up-front. It makes them look good to the LL because they actually found a tenant. And you are happy because you are (presumably) paying well under the "asking" price. Well done to you!

Meanwhile, did you take any special precautions with the paperwork, or did you just stump up and hope for the best?

I tried your tactic when negotiating on my nice brand new new-build and although the LL was keen he wouldn't come down to a level that I considered warranted the risk. If you can get your LL down from 800 to 450 then I would say you have got a good deal - I would anticipate that would be a tough one to negotiate though.

I definately wouldn't go more than 6 mths in advance...very risky....you will be the last one to know that your LL is in default and up for re-posession. How do you know he isn't already going through proceedings. Also if the LL does take £450 in lieu of £800 it would indicate that they are probably a bit clueless or desperate and hence more likely to get re-posessed.

It would be hard to negotiate - I admit that; and I haven't actually done it. It's just a plan at the moment. On the other hand, looking at it from a LL's point of view, I'd say it's better to have £5400 than nothing - especially because these places have been empty for nearly a year.

Next point - they may be in Repo or about to be - I agree that you'd never know that as a tenant.

But how long would it take (given that they are pretty busy and getting busier!) for the bailiffs to arrive?

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I negotiated down my room rent based on the fact I'm a nicer, more considerate type of person to have around. They tried increasing it but in the end they were almost prepared to write off the rent money on the basis no-one else they'd interviewed gave them the same fluffly warm feeling I do! For my part, I do look after the place more than most would.

Combine your wants (lower rent) with their wants (nice, hassle-free tenants) and you're onto a winner.

Disclaimer: May not work with BTLs only in it for the money and have the mentality that a house can be gutted to cleanse it of renter scum once the contract ends.

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Er - OK I admit I hadn't considered reposession. Fair point, Dog. Realistically, how long, though, before the bailiffs actually come and chuck out the tenant?

TTRTR appears to have the solution to this in this topic: http://www.housepricecrash.co.uk/forum/ind...opic=29266&st=0

At the end of the day, even if your story is true, all you need to do is pay the rent & you are protected for the length of your tenancy and even beyond that if you choose. If there's an EA involved, excellent as paying them direct will ensure you are definitely protected during your tenancy.

Is TTRTR's solution to the problem of low upfront cash vs. LL bankruptcy correct? As an expert professional BTLL, one would assume so.

Or is this just what he spins his tenants when they open his mail? :)

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I'm sure you are a very fluffy, pleasant tenant, Avidfan! Far be it from me to question that. Well done for standing your ground. Did you need references or anything in writing to prove your integrity, or did you have enough history with your LL to simply ride on your own reputation with them?

BTLs are in it for the money, I agree, and they (wrongly) think it economical to gut a place to clean it following a bad let: but I think that a £5 - 6K cheque might just stop them in their tracks. They like quick money and psychologically that's what they'd think it was. IMHO.

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I'm sure you are a very fluffy, pleasant tenant, Avidfan! Far be it from me to question that. Well done for standing your ground. Did you need references or anything in writing to prove your integrity, or did you have enough history with your LL to simply ride on your own reputation with them?

BTLs are in it for the money, I agree, and they (wrongly) think it economical to gut a place to clean it following a bad let: but I think that a £5 - 6K cheque might just stop them in their tracks. They like quick money and psychologically that's what they'd think it was. IMHO.

I had over a year of history with my current LL. It's his GF that's money-minded. I expect to maybe have to battle again in 6 months - but I've turned up the charm to "11" so we'll see what happens !

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Our current house was up for £1800 a month and we are paying £900 a month, just by asking, if the circumstances are right you can get a great deal by just being in the right place at the right time.

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just in the process of trying this w/out much luck - shame cos it's a nice house but some LLs are just too bloomin' stupid

TTRTR is correct - if you are a teant and have paid rent then you are virtually unshiftable providing you haven't done anything illegal yourself - anyway, imagine if the Nationwide reposessed somewhere and tried to evict the tenants - they would have a field day

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I can see your point. Well it's a risk, i would seriously consider going for it. I almost did (but I found a decent place at a good price). If you really want to get them watering at the mouth - bring a bag of tenners. Then shop them to the IR when you move out.

The problem I have with this whole strategy is that he landlords most likely to accept your offer are the same landlords most likely to default.

But it should be possible to calculate the utility of such a gamble. If you get 20% off, and "default" refers to when you are kicked out, and p( event ) means the probability of some event as a number between 0 and 1, then your expected outgoings are:

0.8 * p( no_default ) +

0.8 * (1/12) + 1.0 * (11/12) * p( default_after_one_month ) +

0.8 * (2/12) + 1.0 * (10/12) * p( default_after_two_months ) +

...

0.8 * (11/12) + 1.0 * (1/12) * p( default_after_eleven_months )

If this sum turns out to be less than 1.0, then it's expected that you'll be quids in to make the 20% off offer. The problem is in estimating the probabilities, but also calculating the amount of additional costs due to moving sooner than you'd prefer, etc.

just in the process of trying this w/out much luck - shame cos it's a nice house but some LLs are just too bloomin' stupid

TTRTR is correct - if you are a teant and have paid rent then you are virtually unshiftable providing you haven't done anything illegal yourself - anyway, imagine if the Nationwide reposessed somewhere and tried to evict the tenants - they would have a field day

If the landlord didn't have a BTL mortgage or hadn't told their bank that they would be letting the property, and some don't, then the bank can evict. Whether this is likely or not is another argument, but I would expect that if you have paid your rent as a bulk advance payment, and were not going to start paying money to the banks, that there would be more chance that you would get evicted.

Billy Shears

Edited by BillyShears

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It would be better to use discounted cash flow to calculate if its worth it. The trick is determining what the risk factor should be

FH

How about giving us some examples?

I've mostly seen property valued using yields, how about the DCF model?

We could consider historic risk premiums against the risk free rate (ie Gilts)

Would be very useful...

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If you're serious - pay your £2 and check out the land-registry!!!!!

Often times I've discovered in my long rental history - that even renting via Estate Agent - person who said they owned the property didn't!!!

If they've had it for a substantial amount of time - they have more equityand may be more likely to be hanging on to it for other than BTL purposes and your offer is more a case of "as long as we're getting money in for a good tenant".

Alternatively, if they have more equity they might also be looking to sell to bale themselves out of debt. Also a situation I've been in.

It's a big risk.

Citizens' Advice Bureaus these days are increadibly clued up on the rental stuff these days. Whenever I'ved used them - for free - I've always had an solicitor doing freeby days - who've given me sound advice.

Also, depending on your area, you could consult a solicitor free of charge - in my time I've walked in to offices - off street - and got a free consultation with a solicitor qualified in this area - and it's given me peace of mind and the right way to proceed on each occasion.

Just make sure you have all the documents you need to present, a type-written preparared statement of the facts/case in logical date format, and they seem to like that even more and will often give you a little more time.

Show extreme gratefulness - and you might even, as I have done, get a follow-up consultation free too!!

Look up the Short Term Tenancy laws - even a 1 year rental comes under this - and check it out - 'cos I seem to recall things changed last November so that you will always retain your deposit in the event of bankrupcy - and also about in the scenario of repossession what you'll get back/rights you have.

There's another thread on this site about a guys' landlord who's default on the mortgage payments - might be good background reading.

Hope this helps.

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Just an idea. Imagine you have a bit of money stashed away (eg. for a deposit to FTB AFTER the imminent HPC).

You see a new place for rent - really nice, but it is £800 pcm. It's being let (not up for sale -I wonder why?) by a property developer (nice man).

You visit it. Your young lady gets all flushed and aroused. And she likes the place!

So you say to the dude, "Listen. We'll give you £450 per month - but we'll pay a full year in advance, right now. That's £5400 in your hand - NOW. You can take it or leave it. Because we've noticed that there are 650 other lovely empty appartments within a 1km radius of this leather sofa. Are you in - or are you out? I have my chequebook here right move now... let's do business!"

The blood would drain from his face, but I wonder what he would say? Nobody's lived there since it was completed 11 months ago. I reckon some of them would accept.

After the good DrBubb suggesting this a year ago the bestest DrShaker tried it and failed with his present landlord - thus the flat was too nice and close to his work to continue barganing. There was a lot of interest and I could not be bothered hunting again so I took the hit but its cool. I now have a ram flat with a ram flat mate within a ram distance of my work and any girl i take back thinks its ram. What more could I ask for? B)

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Guest Winners and Losers

After the good DrBubb suggesting this a year ago the bestest DrShaker tried it and failed with his present landlord - thus the flat was too nice and close to his work to continue barganing. There was a lot of interest and I could not be bothered hunting again so I took the hit but its cool. I now have a ram flat with a ram flat mate within a ram distance of my work and any girl i take back thinks its ram. What more could I ask for? B)

You forgot to mention how ram YOU are. :rolleyes:

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  • 301 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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