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Ologhai Jones

Paying Six Months' Rent Up-front

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In some previous post somewhere (okay, I admit it: I'm too lazy to look for it!), someone mentioned the idea of offering to pay the first six months' rent in advance as a means to persuade a LL to accept a lower rent.

If the LL has difficulties and is repossessed during the first six months, is the tenant allowed:

- To stay for the full six months, or if not

- Claim the pre-paid rent back for months they don't live at the property?

Any ideas about this scenario?

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If the LL has difficulties and is repossessed during the first six months, is the tenant allowed:

- To stay for the full six months, or if not

The speed at which the tenant can be booted out depends on if the landlord had permission to let from his lender or not.

If the mortgage was a normal residential mortgage, as opposed to a BTL mortgage, and there was no permission to let then the tenancy doesn't exist as far as the repossession is concerned and the tenant can just get booted out.

If it was a BTL mortgage or a normal residential mortgage with written permission to let from the lender then the tenant will be given notice as per the tenancy agreement. This probably means the tenant will get two months notice to leave.

- Claim the pre-paid rent back for months they don't live at the property?

The tenant will have the right to claim the rent back buy suing the landlord, but if the landlord is being repossessed don't hold your breath at getting any money out of him. If he had money presumably he'd have paid the mortgage. So it's best to check that there is permission to let which gives you a minimum of two months to carry on living there. Also worth getting a feel for how solvent the landlord is before you take the property, check www.houseprices.co.uk, ask his letting history etc.

But yes there is a risk in paying six months rent upfront.

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What determines how much security you have in the event of a respossession is not how much rent you have paid but what the terms of the tenancy are and whether they bind the lender. The lender will be bound by your contract with the landlord, provided they know of your existence (legally bound if they officially know and approve, but you might have an equitable right if they know and put up with it). Merely paying six months rent in advance will not make any difference, it just increases the size of your claim against the landlord. This is almost certainly a pointless claim; if the landlord had money, they wouldn't be being repossessed, and you will have to stand in line with the unsecured creditors.

You could protect your 6 months rent if you set up a trust account of some sort, so that the money was only transferred to the landlord on a monthly basis but they knew it was there (this might still be attractive to a landlord). You would then be able to organise things so that you got any funds in the account back should the tenancy come to an end for some reason other than you giving notice or breaching the terms ... It might be possible to do this informally - insist that the money was held in a special account called "funds for paying rent" and indicate that it did not become the landlord's money until the rent was due. But you would be running a risk this was not effective, and the only surefire way of making it effective would involve lawyers ... hardly worth it for the discount you would get, I think.

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It sounds a good idea in practice but I wouldn't do it personally.

The last place we rented the landlord was a great bloke I wouldn't have had a problem with paying him up front, the new one I bearly trust with the months rent.

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I have done it in the past, mainly to secure a flat because i really liked it, it was in a great location and at a great price. Negotiated a discount on a 12 mth let, paid up front in 2x 6mthly instalments.

Of course there is a theoretical risk, but it depends on the landlord, your view on life and the property.

Everything in life is negotiable. I have spoken to lots of people who pay the asking rent without even thinking they could negotiate it down. There are so many empty rental flats at the moment, if you aren't getting at least £50-100 off the rent you really need to move on and try somewhere else.

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Everything in life is negotiable. I have spoken to lots of people who pay the asking rent without even thinking they could negotiate it down. There are so many empty rental flats at the moment, if you aren't getting at least £50-100 off the rent you really need to move on and try somewhere else.

You wouldn't mind giving me that 'if you aren't getting' discount as a percentage would you? I live in a town that's grim and cheap, you see... :)

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