Here is a question to the blog clinic from Oscar (not his real name) who is a tenant.
Four months ago, I entered into an Assured Shorthold Tenancy agreement with a term of 6 months. As I was unable to provide a valid guarantor, I was asked to pay 3 months’ rent in advance in addition to a 1 month deposit. Though I was unable to provide a guarantor, my credit checks, etc., were fine. I did pay all of the requested money, for a total of 4 months’ rent, before being accepted for the tenancy.
Upon signing the agreement, I was informed – verbally – that the 3 month’s rent in advance will be returned to me at the end of the tenancy and that I am to make rent payments each month until then.
The tenancy agreement states that rent is to be paid monthly, commencing one calendar month after the day that I signed the tenancy agreement. I have been paying the monthly rent in accordance with this since entering the tenancy agreement.
As the landlord is expecting to hold the additional 3 month’s rent until the end of the tenancy, and is expecting to receive rent payments each month, it seems as though this money (the 3 month’s rent) is being held as a deposit and should be protected. Only the 1 month’s deposit has been entered into a deposit protection scheme however. The tenancy agreement does note that “The tenant has paid 3 months rent in advance”, and provides the amount, but does not indicate that this would alleviate me of 3 of the monthly rent payments.
My question is: am I right in feeling that the 3 months’ rent should also be protected? If it is not protected, am I within my rights to request that the 3 month’s rent which I paid in advance be used in lieu of 3 monthly rent payments, or is this against the terms of the agreement which requires monthly payments commencing from May?
If the landlord does not accept the rent in advance as payments of rent, and does not protect the money paid, what course of action is available to me to ensure the protection and safe return of the 3 months’ rent?
Your landlord can’t have it both ways. Either
- The money is a deposit – in which case it should be protected, or
- It is rent – in which case it should be used as rent.
The fact that the landlord has told you that the money will be returned at the end of the tenancy says to me that it is, in fact, a deposit. If so, as it is unprotected, this would mean that:
- You are entitled to the return of the money, and
- To bring a claim in the County Court for an award of up to 3x the deposit sum, and
- Your landlord will be unable to serve a valid section 21 notice until the money has been returned to you
What you do really depends on whether you want to stay in the property and remain on good terms with your landlord or not.
Probably the easiest way to deal with this is just to not pay any rent during the last three months of the tenancy on the basis that it has already been paid.
If you want to make a point you could pay rent, wait until the end of the tenancy and then request the landlord return you the three months rent in advance.
If they do so, you could then make a claim to the County Court for the penalty on the basis that this was an unprotected deposit. There is a good chance that the Judge would award you the full 3x the deposit penalty as this is a blatant breach of the deposit legislation. Which would be a substantial sum for the landlord to pay.
If the landlord failed to return the money, then you would claim for the return of the money paid in advance as well as the 3x penalty.
Needless to say, after 1 June this sort of thing will be a prohibited payment under the Tenant Fees Act.