Yes, this is a common solution when tenants can't pass referencing or provide a guarantor.
How it Works within our Rent Now Service
- The tenant pays us the first month's rent and the tenancy deposit
- The tenant pays you the rest of the advanced rent money
As part of the Rent Now process, OpenRent take payment of the first month’s rent and the deposit, and ensure compliance with the law surrounding these. Unfortunately, we aren’t currently able to support collecting any additional months’ rent - either within the tenancy agreement or in collecting payment.
Landlords are welcome to sign additional paper agreements with tenants which go beyond the terms of the contract we provide or use our free text option in our contract. These are the usual ways of accommodating multiple months’ rent in advance.
Payment of the additional months’ rent will need to be made directly to the landlord by the tenant, taking into account the amount the tenant has also paid to OpenRent for the first month’s rent and deposit.
Advance Rent vs Deposit
It is worth stressing the importance of agreeing in writing that the money being paid to the landlord is advance rent and NOT a deposit. While taking rent in advance is perfectly legitimate, deposits need to be protected in a government-approved scheme. It is crucial, then, to avoid the possibility that the money could be considered an unprotected deposit.
If you do intend to take rent in advance, make sure you have a deposit too in order to make sure they are clearly differentiated.
It is worth noting that the definition of a deposit, in relation to an assured shorthold tenancy, is 'any money intended to be held (by the landlord or otherwise) as security for:
(a) the performance of any obligations of the tenant, or
(b) the discharge of any liability of this,
arising under or in connection with the tenancy.'
So the deposit is security for the obligation to pay rent, whereas paying rent in advance must fulfil the obligation to pay rent rather than be viewed as a separate obligation or security.