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Question

England | Start of a Tenancy (England) | Sub-letting and Assigning Tenancies (England)

Renting rooms to local hospital. Bulk payment being made in advance.

23 Aug 2022 | 3 comments

Hi

The local hospital want to reserve multiple rooms I have available.  They will pay 6 months rent and deposit in advance.  There will be no tenancy agreement with the hospital.  There will be an agreement that says they can introduce any member of staff as a tenant and a tenancy agreement will be drawn up directly with the tenant.  Part of the agreement is that there will be no credit checks done.  

My question is if I am invoicing them for the equivalent of 7 months rent is this just seen as an invoice and not a deposit?  The rent money will be drawn-down as a member of staff move in.  I don’t want to find that the monies paid in a lump sum in advance comes under deposit legislation.  The monies will be held on account and utilised as the employees move in then a deposit will be lodged for each room and for that specific tenant.

I hope that makes sense.

Answer

3 Comments

  1. guildy

    If you set up the tenancy agreement correctly, this will be no problem.

    On our Tenancy Builder, under “rent type”, you need to choose “x months in advance”. Choose the number of months (e.g. 6), and then when you receive the funds, that will be the payment per the tenancy, not a deposit.

    One thing to note, as the hospital is paying the deposit on behalf of the tenant, they will be a “relevant person” and must be given a copy of the deposit prescribed information.

    Again, the Tenancy Builder takes care of all this if you select the option underneath the deposit amount and fill in the details. For ease, you should use the integrated digital signing to also send the prescribed information to the relevant person for signature as legally required.

  2. markdunn

    Thank you for your quick reply unfortunately, I have probably not explained myself properly. I know how to set up the agreements, thank you. The thing is the hospital will be making the payment first before I know who will be moving in and so I cannot set up the tenancy agreement until a week or so later.

    Can the invoice I raise be treated as if they were putting in an order for a product purchase as it will not immediately relate to any tenancy or will it be considered as a deposit? Clearly this cannot be considered as a holding deposit as it is way more than 1 weeks rent.

  3. guildy

    Okay, we are a bit nervous but, to be honest unsure on this one.

    The definition of holding deposit is:

    In this ,Act “holding deposit” means money which is paid by or on behalf of a tenant to a landlord or letting agent before the grant of a tenancy with the intention that it should be dealt with by the landlord or letting agent in accordance with Schedule 2 (treatment of holding deposit).

    Schedule 2 says at the top:

    This Schedule applies where a holding deposit is paid to a landlord or letting agent in respect of a proposed tenancy of housing in England.

    I thought there might be some provision about the payment being from an “individual” (which would exclude an entity like a hospital) or other things to avoid, but it’s very broad.

    We think the payment could be a holding deposit because it’s money paid on behalf of a tenant (as yet unknown) to hold a property whilst they take a tenancy. That meets the definition from what we can see.

    It will be fine if the payment is taken after a tenancy is granted, and it’s the holding of the property before a tenancy is granted which is the problem.

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