shoppermonster Posted March 30, 2007 Report Share Posted March 30, 2007 Hi can anyone give me any advise. I am a first time landlady and have just secured my first tenant. I am with a letting agency and am on full managemant. When they found this tenant they said they he fell slightly short of their criteria and as such if he wanted to rent the property he would have to pay 6 months rent up front. I agreed that this was fine. I have just had my statement of account for the first month and only this months rent is on there. When I emailed they said that they could only pay it over to me each month when it was "lawfully due" What I want to know is this normal. Why should 6 months rent be earning interest in their accounts when it could be accumilating in mine. Any thought please. Thanks Link to comment Share on other sites More sharing options...
Simon Dewsberry Posted March 30, 2007 Report Share Posted March 30, 2007 Hi You need to first check your agreement/contract with the letting agent - then if you are still not happy - call your local CAB or tradings standards office to check statutory rights -they are very helpful ! Simon Link to comment Share on other sites More sharing options...
Trenners Posted March 30, 2007 Report Share Posted March 30, 2007 Hi shoppermonster, It is not normal practice - or fair - for a letting agent to receive six months rent in advance from a tenant and then only pay you the money on a monthly basis although I have heard of this type of situation before. Some agents claim that it is their duty to account this money to you - on a month by month basis. This is rubbish. In addition, if your letting is not regulated, your money could be at risk whilst it sits within their bank account because it may not be protected if the agency was to go bust. The tenancy agreement that was signed was between the landlord and the tenant (and not the letting agency and the tenant) so the monies that have been paid to the letting agent should be passed over to you - less their fees. The term "agent" means acting for someone else. Write to the letting agent demanding your money. Give them 7 days to pay. If they refuse then take them to the small claims court. Good luck, Mark (Director of a Letting company in Wiltshire) Link to comment Share on other sites More sharing options...
odecar Posted March 30, 2007 Report Share Posted March 30, 2007 Be careful of tenants who pay 6 months in advance as this occurs quite a lot when people set up skunk factories in residential premises as in paying up front they get left alone until its almost at an end. Have seen one property close to where I live after this occurred and the walls had to be stripped of plaster because of mould, the ceiling likewise and the floor needed a bit of treatment as well. I think insurance doesn't cover it. Landlord got 6k for 6 months rent but think he spent £20k redoing property plus it took 6 months to get it ready for letting again. Usually its houses rather than flats. Link to comment Share on other sites More sharing options...
shoppermonster Posted March 30, 2007 Author Report Share Posted March 30, 2007 Hi Mark, Thanks for the reply and the advice. When I emailed to ask about the rest of the money they said because they are ARLA agents, they state they are not allowed to pay it over to landlords! Do you know anything about this? They say that it is to protect the tenant in "the unlikely event that the property becomes uninhabitable" so that they can have the rent paid, refunded quickly! Link to comment Share on other sites More sharing options...
Trenners Posted March 31, 2007 Report Share Posted March 31, 2007 Hi shoppermonster, I stand by my original advice. If you had not used the agent, but moved the tenants into the property yourself, then the tenant would have paid YOU the 6 months rent in advance. Your Agent was simply acting on YOUR behalf. The excuse about the property becoming inhabitable is lame. If the property did become inhabitable then the tenacy agreement will make provision for this and, in that instant, the tenant will be released from the tenancy agreement and you would need to refund their rent. If you did not refund the rent then the tenant would sue you for the money. ARLA are simply a regulatory body for letting agents. A lot of agents (probably the majority) are not members of ARLA because they add little value. Being a member of ARLA does not give the letting agent the right to hold onto YOUR money. Here is an excerpt from the ARLA Code of Practice :- "For the avoidance of doubt, money held or rent collected for and on behalf of client landlords (including ex-clients) is considered as client money and this will include deposits or money held for and on behalf of an applicant, tenant or ex-tenant." The money collected from the tenant is client money (YOUR MONEY) and you want it or you will see them in court. Mark Link to comment Share on other sites More sharing options...
shoppermonster Posted April 2, 2007 Author Report Share Posted April 2, 2007 Hi Tenners, Thanks for your advise again. I emailed them this morning with my findings or yours should I say and they said on this occasion they will let me have the remaining but on the understanding that I confim that should the property become inhabitable then I refund the money to the tenants immediately. I have done this but have said that only if the reason it becomes inhabitable is not due to something that the tenants have caused. Thanks again Sara Link to comment Share on other sites More sharing options...
Melboy Posted April 2, 2007 Report Share Posted April 2, 2007 Hi Tenners, Thanks for your advise again. I emailed them this morning with my findings or yours should I say and they said on this occasion they will let me have the remaining but on the understanding that I confim that should the property become inhabitable then I refund the money to the tenants immediately. I have done this but have said that only if the reason it becomes inhabitable is not due to something that the tenants have caused. Thanks again Sara .........and quite right too Sarah! Never heard of such a load of twaddle. I often let my properties out with 6 Months paid up front and I have always received the full amount.....without exceptions. Mel. Link to comment Share on other sites More sharing options...
GPEL Posted April 2, 2007 Report Share Posted April 2, 2007 Alternate view Six months rent may have been taken in advance but it is still the tenants money and should only be drawn down on the rent due date. When taken by an agent it should be kept in an assured client account. It is there to give peace of mind to the tenant, landlord & agent. Should the tenant be in a precarious position the landlord knows he'll get his money, should the landlord be in a precarious position the tenant will get back outstanding money returned and if taken by the agent and properly controlled other parties are protected. Plus, if the agent has taken the money and passed it to the landlord, the agent is liable to the tenant for the landlord's handling of this money, which they are understandably reluctant about. The agent's account is unlikely to be attracting high interest charges as it is probably in a bonded current account. Don't see an issue with this, they're doing their job. Nothing wrong in requesting it all for yourself but agent may not handle similar applications for you in the future due to the risks attached. Don't forget that the TDS was brought in because of the unscrupilous actions of certain landlords, so agents may be risk managing advance rents like this. However, though paid in advance, the agent is still obligated to perform the full managment service throughout the tenancy. Link to comment Share on other sites More sharing options...
Simon Dewsberry Posted April 2, 2007 Report Share Posted April 2, 2007 An Observation on an Alternative View ! Hi GPEL Behave yourself !- we'll be having rents paid in protection schemes in a minute if you carry on like that !! "Six months rent may have been taken in advance but it is still the tenants money" Is it though ? Normally a T will pay one month in advance - Is that the tenants money once handed over ? (assuming house remains habitable !)Or do we draw down on it hourly,daily, weeky etc? An AST generally states monthly, so from this we can safely say a month is a "unit" of "money" at a time .. ... So.......... if a Tenant is given a deal where they pay 6 months up front due to "personal circumstances" this then becomes a "single unit" if it were my lease they would have the option to make apayment of a second "unit" or six month payment; after the original 6 mth period, or leave ! On this basis the money is a "single unit" payment (as defined, hopefully, by sara's lease!) then clearly the agent had no business handing over one sixth of it ! Normally as we know 6 mths upfront is paid when a T is already in a "precarious" (or at least not brilliant! on paper)position - to remedy this we get 6m up front single payment - Landlord will have far greater peace of mind when Money is in his/her acc!!!!! (i know i would!) The tenant, if even aware of the situation!, would probably feel better knowing that the person the money was intended to go to had received "payment in full" and be safe in the knowledge that he has 6 months accom paid for to enjoy !! The agent on the other hand would have to knock 2-3% interest on the amount out of his GP for the year -and if to many of his clients do this to him then he will have to have his cake with no cream so to speak! Bless him! I know one agent who has around £750k in his client acc - the interest on that isn't going to make him rich, but, - let's just say it helps ! I have a good friend who is a partner in a small solicitors practice - his client acc rarely drops below £1million at any given time - as he says - "i wouldn't smile if it the interest was taken away from me!" Simon Link to comment Share on other sites More sharing options...
GPEL Posted April 3, 2007 Report Share Posted April 3, 2007 Simon Very easy to draw conclusions that serve our point of view but it's a legal-fact that any rent held before the due date is still the tenants. EG If you take 1 month's rent in advance before a tenancy starts and the tenancy doesn't proceed you must refund the money, less small element of costs for re-marketing etc. Some have tried their luck but case law wouldn't support it. The tenant feeling comfortable that their money is held by an unknown landlord in an account they have no details about when they have paid several thousands of pounds to an agent advertizing bonded accounts is arguable. Solicitors are allowed to hold client money in high interest accounts that just aren't available or allowed for companies operating under Financial Services Authority regulations and regulatory body procedures (it has to be kept in an instantly accessible current account and only attracts v.low interest). Maybe solicitors should also pass client money on to the other party before it's due. Just food for thought. Link to comment Share on other sites More sharing options...
Simon Dewsberry Posted April 3, 2007 Report Share Posted April 3, 2007 Hi GPEL Agreed - but once the tenancy has started; then that rent "payment" is surely completed as a "unit" of payment - if the "unit" is 6 mth why should agent hold it ? The "unknown Landlord" is "their Landlord" the owner of the prop they are living in - and as such is surely the person who needs to be paid - if i buy a property and he sol holds the money - i am am more comfortable when the vendor (at the end of the chain so to speak)has received payment and the deal is done! They have receipt for payment from agent and now can enjoy 6ths accom - the reality is that the tenant will not even know if the agent is holding or landlord has been paid anyway ! Simon Link to comment Share on other sites More sharing options...
Recommended Posts
Archived
This topic is now archived and is closed to further replies.