Should I Pay My Landlord Rent In Advance To Secure A Property?


Should I pay rent in advance?

On the surface, paying rent in advance may seem like a win-win scenario for both landlord and tenant; the tenant secures a property they’re keen on (which they otherwise may not have secured), and the landlord receives a chunky lump-sum, not having to worry about the prospect of rent arrears in the near future.

However, before you decide to stump up a small fortune, perhaps there’s reason to err on the side of caution!

First and foremost, I should probably make it clear that tenants willing to pay rent in advance is particularly uncommon (for the obvious reasons). At least, from my experience it is.

Over the last decade I’ve only had one tenant offer to do it, and he was my second ever tenant if my memory serves me correctly (which it usually doesn’t). Either way, it was donkey’s years ago. But it happens.

Why tenants should think twice before paying rent in advance!

Whilst paying rent upfront may initially seem like a great way of securing a tenancy for a rental property in high demand (for example), there is an obvious pitfall in the tactic!

What happens if the landlord ends up being lousy. For example, if s/he doesn’t make necessary repairs? THEN WHAT?

You’ll essentially be stuck in a property managed by an asshole landlord that you don’t necessarily want to occupy longer than necessary, and you’ll have little leverage. Not that withholding rent in cases of disrepair is encouraged or legal, but you know what I mean.

The landlord at this point will literally hold all the chips. Not a nice position to be in. I can guarantee that you will feel sick to the stomach having paid so much rent in advance to an utter douche-bag.

While you have the grounds to venture down the legal route and seek compensation if your landlord fails to meet his or her legal obligations, it’s still a whole bunch of hassle. I think the reality is, you would rather have not paid so much rent in advance.

So yeah, that’s definitely a point to be wary of.

If you decide to pay rent in advance!

To clarify, I’m not trying to encourage or discourage anyone from paying or accepting rent in advance! I just want to make it clear that it’s not an infallible plan, even though it can easily disguise itself as one.

I completely understand why some tenants proceed with paying rent in advance:

  • If a property is incredibly desirable with plenty of demand, paying rent in advance could be the tipping point that encourages the landlord to let the property to them.
  • It helps some tenants manage their finances, knowing they don’t have to worry about paying rent every month.
  • Some people just don’t like to be in debt.

I definitely get it.

If you’re adamant on paying rent in advance, allow me to suggest the following:

  • Do your due diligence on your prospective landlord! Here’s a blog post all about how to find a good landlord.
  • Think carefully about how much rent you want to pay in advance. You may want to limit your risks by handing over too much leverage.
  • Your tenancy agreement should clearly state how much you paid upfront and for how long it covers.
  • Pay the rent electronically so there is proof of transfer! Do NOT pay in cash.

Why Landlords should think twice before accepting advanced rent

I was initially going to only highlight the dangers of tenants paying rent in advance. But the reality is, there’s also reasons for landlords to be cautious. So I should probably discuss that, too.

Having a tenant pay a huge chunk of rent upfront should be every landlords wet-dream. I’m salivating just at the prospect!

However, you know what they say. If it sounds too good to be true…

That said, it’s not particularly surprising that tenants paying rent in advance has been a common sign of foul play; some tenants do it for toxic reasons:

  • The tenant doesn’t want to be disturbed because they’re partaking in illegal activity in the property. For example, criminals renting properties to harvest cannabis farms has become a growing trend.

    When a tenant pays so much cash upfront, there’s usually very little reason to contact them. You can also assume that if the tenant is up to no good, reporting any maintenance issues isn’t going to be at the top of their agenda.

  • The tenants have AWFUL rental history, so the offering of large some of cash is a diversion.

I’ve accepted rent in advance from a tenant!

Yup, I did it.

Being wiser and more experienced, I’m not sure if I would do it again. But maybe I would, I guess it would depend on the circumstances.

I remember feeling excited when my tenant paid 12 months upfront, at the time. I grabbed the money out of his grubby little mitts like he was holding crack and I was an addict looking for my next hit! GIMME!!!

I don’t even remember considering any of the risks (I definitely won’t be that foolish again) – I was too busy feeling overwhelmed knowing that my mortgage would be paid for the next 12 months. I felt safe.

I’m pretty sure most landlords would feel the same. Only natural.

Fortunately, it worked out just fine for me! I didn’t have any problems. So obviously it can work out wonderfully.

If your tenant wants to pay rent in advance…

If I was approached again by a tenant willing to make it rain on me, I would do the following (and recommend that other landlords in the position to do the same):

  • Ensure thorough referencing is conducted. Getting references from past landlords would be a critical component of that process.
  • Understand the reason for why the tenant wishes to pay in advance. In my case, my tenant said he doesn’t like to be in debt, and prefers not having to worry about rent each month. Fair enough.
  • Definitely take a deposit (I say this because it might be easy to side-step a deposit if rent is paid in advance).
  • There has been legal complications with taking rent in advance (Johnson v. Old) - the issue was that the advanced rent was deemed as a "deposit", and the landlord was facing heat for not securing the deposit (because obviously the landlord thought it was rent, so didn't see any need to secure it in a deposit scheme).

    To avoid any confusion, make sure it is clear in the tenancy agreement that rent has been paid in advance. Specify the amount and the duration it covers. Also, make it clear how much was taken for the deposit! It's critical to make the details clear.

  • Conduct regular quarterly inspections to ensure the property is being taken care of properly.
  • Only accept the rent electronically so there is proof of transfer! Do NOT accept payment in cash. Criminals tend to prefer cash.

Right, so that’s a wrap. It’s been a blast.

If anyone has any stories to share regarding paying rent in advance, please share…

22 Comments- Join The Conversation...

Guest Avatar
Newman 27th September, 2012 @ 15:07

Surely a deposit is whatever is documented as a deposit in the contract?

Can they really claim that everything but the first month was deposit if you have written agreement that they are paying rent in advance? It's not like they are getting it back at the end.

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The Landlord Avatar
The Landlord 27th September, 2012 @ 15:39

You'd think so! But as explained in the link I provided to the landlord law blog, there have been several cases where advance payments have been found to be deposits!

It still sounds like a bit of a uncertain area, but it's something Landlords should be aware of.

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TurnKey Landlords 28th September, 2012 @ 08:50

Interesting - I'd never have realised that advanced rent is seen (in the eyes of the law) as a deposit... That seems a bit crazy to me. I think students try and pay up-front a lot of the time (or their parents do) - would this still apply to them (I assume it does...) that may change things for a lot of landlords! Thanks for highlighting it :)

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Benji 28th September, 2012 @ 15:43

A more up to date article from the same source-

http://www.landlordlawblog.co.uk/2012/08/28/when-is-rent-deemed-to-be-a-deposit-update-on-johnson-v-old/

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The Landlord Avatar
The Landlord 28th September, 2012 @ 16:49

Ahh I never saw that update, cheers. Although, I'm still not sure what the legislation is; still seems a bit wishy-washy. But the final comment from Tessa was:

"I think the answer is to make it clearer in the tenancy agreement that it is rent in advance and not a deposit. In the Johnson v. Old case it was unclear."

So if a landlord does take rent in advance, they should clearly stipulate it in the tenancy agreement.

In the past I've had a tenant pay 12 months in advance, and I never stipulated that in the tenancy agreement. Ouch!

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Guest Avatar
Helen Fisher 2nd October, 2012 @ 15:17

Another danger with paying 6 months in advance is what happens if the landlord doesn't pay the mortgage and the property is repossed?
Agents are legally obliged to pay the landlord up front if they receive the rent in advance. So the landlord has all the money and the tenant is evicted.

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Benji 2nd October, 2012 @ 17:29

Hello Helen,
It's an interesting point.

If the landlord has a Buy To Let mortgage or permission to let, then the lender must honour the terms of the agreement. A tenant should certainly check before handing over 6 months rent.

If the landlord is letting the property without permission then a tenant still has a right to at least 2 months further stay at the property. Lenders are legally obliged to write to the occupants about repossessions, which is why tenants should always open letters addressed to the occupier and not automatically assume it is junk mail.

If an agent is involved, I would think a tenant may have some recourse against them for not checking the landlord had permission to let. However, as letting agents are unregulated and any cowboy can set themself up as one, this might prove difficult to pursue.

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glennw1 15th October, 2012 @ 12:18

Something else to consider about receiveing rent in advance is to make sure this doesn't affect what constitutes a "period". If it is 6 months in advance and the tenancy has gone periodic is the period 6 months or 1 month?
The tenancy should clearly state that when the fixed term ends it becomes MONTHLY periodic or else a section 21 might need to be given 6 months in advance! This is because section 21s must give 2 months notice and 1 period. So if the period is 6 months - you are looking at 6 months notice!!!
This also links in with the need to be clear (as mentioned above) that it is rent not a deposit - as if the depsoit isn't registered you can't serve a section 21 anyway!

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ruphilyn 16th October, 2012 @ 14:44

Somehow it can do good paying in advance if you landlord is credible but the in the other hand it can also be bad for you because what if the landlord doesn't pay the mortgage or the other stuff it could be a problem to you.

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Altaf 4th February, 2013 @ 12:54

Can letting agents pay six or twelve months rent in advance to entice the landlord

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LeaseTalk 16th February, 2013 @ 19:26

I believe there are unique cases where offering advanced rent is appropriate and legitimate.

I recently wrote an article on a similar situation, where the tenant was moving to a new country and wanted to secure a "perfect apartment" months before hand. To entice the Landlord, she wanted to offer up to 6 months rent in advance.... without doing a walk through.

My advice to her was to go ahead and offer the advanced rent, but only if she was certain the property satisfied basic safety and comfort criteria.

Read her story on my blog; http://www.leasetalk.net/2013/02/should-i-pay-rent-in-advance.html

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6 Months Rent! 13th May, 2013 @ 17:59

This has been requested by an estate agent of me just now. I am an architect and familiar with the principles of contract and indeed of what can go wrong with a dwelling. I, being Irish and moving to London was asked by the estate agent to agree to 6months rent in advance. I agreed to it in principle but had an issue as to how it was being handled. Firstly if something were to happen to the premesis in the first 6 months through no fault of mine resulting in me having to leave the premesis how am I to ensure I get my undue rent back. There was nothing in the contract or indeed to say that the advanced payment was taking place!!

In such circumstances in building contracts where monies need to be held in trust they are held in a joint account. Neither party can remove sums without the others consent to the bank. A joint account with a monthly direct debit to the landlords account would solve this. I requested this to but was they wouldnt have it.

My alternative was to have a clause put into the contract to cover it to some degree and also asked the agent for a copy of the landlords insurance to make sure it covered them for loss of rent in such an event as they cannot claim for loss of rent if they have been already paid rent. In other words it makes no odds to them to pay you back as they will get it from their insurer.

There should be clearer legislation on this. Indeed the practice should be limited to say 3 months or banned altogether. In ireland standard practice is that the landlord keeps the deposit if you terminate the lease and thats the end of it. Its clear and simple.

Good Blog by the way

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Monica 22nd October, 2013 @ 07:36

Hi we have a problem. We have rented a house in July and we have paid rent six month in advance.
Now the Landlord ask us if we would rent for the house from January for six month again.
The terms are: we have to paid rent six month in advance at the same price again because the agency told us we didn't have credit history and therefore will be required to pay 6 month in advance.
But we have to pay for the first 6 month and we think we have credit history, bank account, credit card.
We don't understand that and we have wrote to the agency.
The agency told us that they ask to the Landlord for the monthly payments but we need to be re-referenced for the second time.
Answer: Is legally to pay for the sec time six month ? Or to be re-referenced for the second time? What can we do?
Sorry for my English I'm improving.
Thanks for your Help

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steph 24th January, 2014 @ 15:36

can someone help me please we moved in to a house and we paid 6 month rent up front but they took £750 off us for a credit check but i dont get why because we payed the rent up front can they do that to us ?

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emma stewart 17th February, 2015 @ 19:38

hi Im having to move home again for the third time because my landlord is selling.
I have had problems with rent ie its been late and now they the esate agents wont rent me another property which I know is my fault I have never missed payments with any other landlord.
And really worried I wont be able to rent with agents again.
Can anyone offer some helpful advice.PLEASE

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Karen Knight 21st June, 2016 @ 17:16

We are about to rent a property and because of a CCJ the landlord has asked for a year's rent in advance. We can do this but how are we covered if he turns out to be a bad landlord? How is our money covered? The estate agents usually release the money monthly but he wants the lot. I'm worried.

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Lisa scarrott 10th April, 2017 @ 23:28

Would it be OK if I was to pay my landlord rent money early its supposed to be on the 23rd of every month but I don't always get paid esa on the 23rd I get paid after the 23rd on some dates and cases. I get my housing benefit on 23rd but not my ESA payment. I would rather pay him early then late but I don't know if this would cause problems. I pay him by standing order

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Kelz Kiewicz 9th June, 2017 @ 07:23

I signed a 12 month lease but paid 6 months up front and my upfront rent is still covered for another 2 weeks but my landlord is saying my rent is now overdue. How is that possible when when my 6 months isn't up yet?

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MikePem 23rd September, 2017 @ 09:43

I'm an OAP downsizing to a one bed flat. The rent is £600 pcm but (according to the letting agent) my income is under the "legal" level for them simply to accept a month and a half in advance (which they call a deposit. So they have asked for 6 months in advance which they say is the UK "legal" requirement. My question is simple. Is there (as the agent would have me believe) a government law pertaining to rent advance periods being calculated according to the incoming tenant's income? Please answer as soon as is possible - thanks.

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Benji 23rd September, 2017 @ 10:44

@ Mike,
No law or legal requirement.
But up to the landlord or his representative to choose who they want to rent to.
Industry standard is usually 2.5 times income to rent. (Personally I require >3.5 times).

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Guest Avatar
Karen fereday 31st October, 2017 @ 17:22

Hi,
My daughter and her partner have just put an application in for a house
However they have said the rent is payable on the 1st of the month and her partner does not get paid until the 15th
They will be paying a deposit and first months rent in advance as you do
But they won’t budge on the payment date and have said if they are continually late (ie 14 days ) they could find themselves evicted
Even though they will be paying every month

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Simon Pambin 1st November, 2017 @ 14:30

Well, persistent late payment of the rent could indeed constitute grounds for a Section 8 eviction. That's just the way it works, whether it's a rental or a mortgage: you pay the amount due on or before the stipulated date or you're breaching the agreement.

In this case I don't see the problem, though. If your daughter and her partner pay for the first month before they move in, and her partner gets paid on the fifteenth of the month, then why wouldn't they still have the money for the rent come the start of the second month?

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