Landlords asking for 3 months rent in advance

Sad Professor

The subject of landlords demanding 3 months rent in advance has come up in several other threads recently with many users suggesting that it is now the norm and is perfectly fair given the risk of getting a bad tenant. Rather than continue to drag these threads off-topic and cause headaches for the mods, I thought I would start a separate thread about it. I hope this is okay.

What are people’s thoughts on this? Are landlords justified in exploiting current market conditions and already stressed tenants to demand bigger deposits? Obviously some landlords are struggling financially and many are choosing to leave the market. Are these landlords merely reaping the seeds of their own bad investments? What about “accidental landlords”?

And what about tenants struggling to put a roof their heads in the middle of a housing crisis. Should they cough up these exorbitant deposit increases? Do they have a choice? Or does the government need to step in and regulate the market to prevent this?

Is 3 month rent in advance really becoming the norm now? What are people's experiences?

Graham

Sad Professor wrote: »

Are landlords justified in exploiting current market conditions

Let me rephrase that for you.

Is it reasonable to ask for a deposit generally amounting to less than the value of the kitchen appliances before handing over the keys to a property worth hundreds of thousands of euro.

Given a bad tenant can deprive a landlord of 12 - 24 months rent before they are evicted from a property for none payment of rent, can you understand why some landlords are asking for more than a single months rent as a deposit.

athtrasna

Just to clarify, what you are referring to is the emerging practice of landlords seeking the first and last month's rent up front as well as a deposit equivalent to a month's rent.

3 months seems OK to me. A lot of tenants like to think of their deposit as the last month rent.

Deub

I don't see it as an issue. Tenants will be more carefull with the property.

dori_dormer

I think you should need to pay first and last months rent, as well as a deposit based on the size/ contents of a house. You could have exactly the same house in Donegal for rent as one in dublin. Deposit in Donegal = 600, dublin = 2000 doesn't make sense.

athtrasna

dori_dormer wrote: »

I think you should need to pay first and last months rent, as well as a deposit based on the size/ contents of a house. You could have exactly the same house in Donegal for rent as one in dublin. Deposit in Donegal = 600, dublin = 2000 doesn't make sense.

It does when it comes to property value and reinstatement costs?

Baby01032012

I'm tired of reading Sad Professors posts on this topic on numerous threads.

No one is being exploited.

It's not 3 months rent as eveyone else has explained - months rent in advance plus deposit plus last months rent. To avoid being left with deposit to cover last months rent and nothing for legit damages etc.

3 months is similar to parts of Europe and US.

It's very difficult for landlords to get a bad tenant out who wants to stay.

landlord has an asset worth hundreds of thousands and no guarantee tenant won't abuse it.

The answer is a deposit holding system but those in power have failed to act so landlords have no other choice but to protect themselves.

I think three months rent in advance is ridiculous. I think better legislation for landlords to evict non paying tenants would be good for both landlords and good tenants, because if it was easy to remove bad tenants then surely there would be no need for 3 months rent?

Also everything comes in swings, at the moment its a landlords market they can ask for ridiculously over priced rent and 3 months rent but things will swing back out of their favour in the future.

percy212

First, last, and a security deposit might seem reasonable, but the LL is still left with only the deposit to deduct from for damages at the end of the tenancy, therefore pointless. All it does is make it even more difficult for renters to rent, and renters tend to have less money to throw around, ergo you know, the whole renting lark. LL's are a greedy greedy bunch of Silas Marners in this country.

Emmadilema123

I understand why but it might be difficult for some people to actually do. Anytime I've moved from one rental to another I've used the deposit back from the first one as new deposit and then months rent as usual. Probably would have found it harder to move on at short notice if I needed to make up an extra months rent to move.

If it's first time rental from say a parents house it would be a lot easier to stay with parents until you have enough to move out . As most decent places are looking for landlord references, maybe 3 months rent up front or landlord reference with 2 months might be easier for landlords to get someone into the property quicker.

dori_dormer

How would the cost of replacing a table and chairs be a different price in a different county? The cost to replace a fully furnished houses contents vs unfurnished should be reflected in the deposit amount not on the rental market cost per month

frogstar

I've no issue with this but as far as I know there is still no protection for tenants paying their deposit as the landlord doesn't have to put it into a trust/escrow account. I think that is normal in UK to put it into trust ? Presume Ireland hasn't gone t hat way yet?

As a landlord I'm happy to ask for one month but understand why someone would want three months.

dori_dormer

dori_dormer wrote: »

How would the cost of replacing a table and chairs be a different price in a different county? The cost to replace a fully furnished houses contents vs unfurnished should be reflected in the deposit amount not on the rental market cost per month

The problem is if renters are willing to pay the ridiculous deposits then landlords are going to ask for them because... well .. they can.

Mycroft H

I'd know I'd find it hard to come up with ~4200 euros in one go (Calling Dublin rents average at 1400 euro p.m). I suspect I'm not alone in this.

Its dead Jim

I would just look elsewhere unless it was a very nice place which few are. That could be 4K required when you consider the deposit for the last place.

Deub

When I rented in France, landlords requested what we call a "guarantee" meaning family or friends. If I didn't pay my rent, the landlord would go after them for the money.

We had to provide last 3 to 6 payslips as well.
I don't see landlords as greedy. They try to protect their investments.

K.Flyer

Considering that the average monthly rent on a 2 bed apartment in Dublin City is approx 1400 euro, that equate to dropping 4,200 on signing the lease. Go to something a slight bit upmarket and landlords will be expecting potential tenants to cough up almost 6,000 euro.
At that rate, and how prices are still on the up, I imagine people will stay put for longer and move less often.

athtrasna

frogstar wrote: »

I've no issue with this but as far as I know there is still no protection for tenants paying their deposit as the landlord doesn't have to put it into a trust/escrow account. I think that is normal in UK to put it into trust ? Presume Ireland hasn't gone t hat way yet?

As a landlord I'm happy to ask for one month but understand why someone would want three months.

Presume you ask for a deposit too? The OP would call that two months rent going by their logic

Noahboah2014

Have only ever been asked for a months deposit & a months rent up front. Seems to be the norm where I live

Graham

Deleted User wrote: »

I think better legislation for landlords to evict non paying tenants would be good for both landlords and good tenants, because if it was easy to remove bad tenants then surely there would be no need for 3 months rent?

+1

I think that is a really significant part of the issue and the solution.

hognef

In Norway, deposits are normally *at least* the equivalent of three months rent. The deposit is held in a special bank account. There is no way for the landlord to unilaterally decide to keep the deposit. I never had any issue with that setup.

Yet I'd be very reluctant to hand over any more than a month's worth of deposit to an Irish landlord who could decide not to return it simply because he's already spent it.

_Kaiser_

Noahboah2014 wrote: »

Have only ever been asked for a months deposit & a months rent up front. Seems to be the norm where I live

This is mainly a Dublin thing where LL's are seeing an opportunity to make some extra pocket money I'd say

I've been renting 20 years and have always left a place better than I found it with some great references from former LL's who were sorry to see me go, but there's not a chance I'd hand over 4k just to live in a probably average at best property in Dublin with no security after year 1 and (with only 2 exceptions in my experience) a lot of effort and chasing required when something needs doing, or when you leave and want your deposit back.

I'll stick with the flexible commute I have and a similar sized place for less than half what I paid in Dublin

Gumbo

Sad Professor wrote: »

The subject of landlords demanding 3 months rent in advance has come up in several other threads recently with many users suggesting that it is now the norm and is perfectly fair given the risk of getting a bad tenant. Rather than continue to drag these threads off-topic and cause headaches for the mods, I thought I would start a separate thread about it. I hope this is okay.

What are people’s thoughts on this? Are landlords justified in exploiting current market conditions and already stressed tenants to demand bigger deposits? Obviously some landlords are struggling financially and many are choosing to leave the market. Are these landlords merely reaping the seeds of their own bad investments? What about “accidental landlords”?

And what about tenants struggling to put a roof their heads in the middle of a housing crisis. Should they cough up these exorbitant deposit increases? Do they have a choice? Or does the government need to step in and regulate the market to prevent this?

Is 3 month rent in advance really becoming the norm now? What are people's experiences?

So the norm is 90% of cases is 2 months rent at the moment (one month security and one month rent up front).

The other 10% want 3 months now, security, first month upfront and the last month upfront. So the tennant of moving will have the last months rent and his deposit back to throw straight onto the next property.

Seems fair to me to be honest.

Sad Professor

Okay so some of the justifications offered so far include:

Tenants tend to take the deposit as the last month’s rent, so landlords are entitled to take an extra month as the real deposit…

I wasn’t aware of this. We have always received the deposit separately, often after some haggling. Our current landlord claims the agency who he stopped dealing with several years ago has it. They say he has it. Anyway, I fail to see how this addresses the problem. Now tenants can just take the last two months as the deposit.

There are bad tenants who don’t pay rent and destroy the landlord's asset, landlords need the extra deposit in case…

Yes and after doubling the deposit there will still be bad tenants, except now they may feel aggrieved that the landlord took 3 months rent in advance. And good tenants may not be able to secure the property for no other reason than the landlord, despite requesting extensive documentation in the form of references and bank statements and payslips, apparently has no way of knowing they aren’t a house-wrecker who will stop paying the rent and refuse to leave. Not that the extra month's deposit would actually pay for the kind of losses that landlords fear, so given the chance landlords might start looking for even bigger deposits in the future.

This is the norm in other countries…

A lot of things are the norm in other countries. Like established renting cultures and healthy housing markets. But Ireland, as we all know, is not other countries. We do things… differently here. And without detailed examples there’s nothing to suggest that just because wherever does something that we should do it too.

firestarter51

kceire wrote: »

So the norm is 90% of cases is 2 months rent at the moment (one month security and one month rent up front).

The other 10% want 3 months now, security, first month upfront and the last month upfront. So the tennant of moving will have the last months rent and his deposit back to throw straight onto the next property.

Seems fair to me to be honest.

I agree with you there about the months rent and deposit being handy for the next property

I also think a landlord should be able to evict bad tennents quicker, some landlords are waiting 12-24 months, it's ridiculous and they have no way of recouping the lost money
There needs to be a change in the system for evictions

Graham

Sad Professor wrote: »

Okay so some of the justifications offered so far include............

And the debate against larger deposits appear to be..

I don't like it.
Some tenants can't afford it.
It's not enough to cover any significant damage anyway.
Some tenants might smash the place up out of resentment for the deposit.

Not exactly compelling points to put to any potential landlords.

Grolschevik

Bad tenants will still destroy property and overhold. Tenants that would have used the deposit for their last month's rent, will now stop paying rent two/three months earlier.

Will make no difference to the bad tenants, make life much more difficult for the good tenants, and enable 'bad' landlords to hold onto more of a tenant's money.

Don't see the point. A neutral arbiter/deposit holding agency is what's needed.

FortySeven

Deleted User wrote: »

3 months seems OK to me. A lot of tenants like to think of their deposit as the last month rent.

And a lot of landlords think the deposit is free money.

Graham

FortySeven wrote: »

And a lot of landlords think the deposit is free money.

A lot more don't think that.

I have never had a problem getting the full deposit back. Not even a sniff of a problem over many many rental properties.

FortySeven

Graham wrote: »

A lot more don't think that.

I have never had a problem getting the full deposit back. Not even a sniff of a problem over many many rental properties.

I've had issues twice. Most landlords have been sad to see me go but there are always a few bad apples.

Sad Professor

Grolschevik wrote: »

Bad tenants will still destroy property and overhold. Tenants that would have used the deposit for their last month's rent, will now stop paying rent two/three months earlier.

Will make no difference to the bad tenants, make life much more difficult for the good tenants, and enable 'bad' landlords to hold onto more of a tenant's money.

Don't see the point. A neutral arbiter/deposit holding agency is what's needed.

Here's an article in the IT from 2014 about such a scheme. Not sure what the current status of it is. I assume it would be accompanied by faster eviction processes.

gordongekko

FortySeven wrote: »

And a lot of landlords think the deposit is free money.

A lot of tenants thinks the deposit covers vandalism

Hopeful2016

dori_dormer wrote: »

How would the cost of replacing a table and chairs be a different price in a different county? The cost to replace a fully furnished houses contents vs unfurnished should be reflected in the deposit amount not on the rental market cost per month

The value of those furnishings depreciate over time. You can't expect to take the cost of new to replace items that are not brand new and that the LL has claimed capital allowances on. Do you propose to hand back part of the deposit each month/year to reflect the ageing of the furniture/contents?

Graham

Sad Professor wrote: »

Here's an article in the IT from 2014 about such a scheme. Not sure what the current status of it is. I assume it would be accompanied by faster eviction processes.

Much more sensible approach, centrally held/protected deposits and a legal eviction process that isn't counted in years.

FortySeven

gordongekko wrote: »

A lot of tenants thinks the deposit covers vandalism

Not a lot, a minority.

athtrasna

In my LL days our last tenants did about 5k worth of damage and still got a portion of their deposit back - we wanted them out. My friend had over 15k worth of damage done to her house, and couldn't rent it for 3 months while the repairs were ongoing.

Three months rent will never protect a landlord, it will reduce the tenant pool to those who can afford that money and who in theory will respect the property.

_Kaiser_

athtrasna wrote: »

In my LL days our last tenants did about 5k worth of damage and still got a portion of their deposit back - we wanted them out. My friend had over 15k worth of damage done to her house, and couldn't rent it for 3 months while the repairs were ongoing.

Three months rent will never protect a landlord, it will reduce the tenant pool to those who can afford that money and who in theory will respect the property.

Well maybe being a LL isn't for you then?

You cannot judge a whole group of tenants (or indeed LL's) by the actions of what IS still a minority. Yes there should be a faster eviction process and yes deposits should be held by a third party, but a lot of LL's are in the game by accident or because they saw it as an easy way to make cash and now resent that it hasn't worked out that way.

Those should just sell up and move on to be honest. Neither other LL's or tenants benefit by having reluctant LL's in the market.

faceman

A friend of mine has relocated to the US and has no credit history there. Landlord asked for 2 months rent as deposit. Quite understandable.

However I can't see how 2-3 months can be justified here where references can be obtained easily.

FortySeven

athtrasna wrote: »

In my LL days our last tenants did about 5k worth of damage and still got a portion of their deposit back - we wanted them out. My friend had over 15k worth of damage done to her house, and couldn't rent it for 3 months while the repairs were ongoing.

Three months rent will never protect a landlord, it will reduce the tenant pool to those who can afford that money and who in theory will respect the property.

The way things are going LLs will be reduced to renting to drug dealers. Anyone else with the deposit and rent in advance requirements in this current market would be better staying put until they are in mortgage deposit territory.

athtrasna

_Kaiser_ wrote: »

Well maybe being a LL isn't for you then?

I think you missed the start of my post "in my landlord days". Glad to be out, wish we could have gotten out sooner, would never ever advise even my worst enemy to be a landlord in this country with the current taxation/legislation burdens.

Sad Professor

_Kaiser_ wrote: »

Those should just sell up and move on to be honest. Neither other LL's or tenants benefit by having reluctant LL's in the market.

I get the impression some landlords don’t want a tenant. They want an asset manager who pays them for the privilege of managing their asset. Their ideal "tenant" is a professional (i.e. works all day), has no children, doesn’t smoke, doesn’t have pets, doesn’t dry their clothes indoors and who only comes to the house to sleep. You know, because if they were there more than that they might damage something.

_Kaiser_

athtrasna wrote: »

I think you missed the start of my post "in my landlord days". Glad to be out, wish we could have gotten out sooner, would never ever advise even my worst enemy to be a landlord in this country with the current taxation/legislation burdens.

And I'd love to not be a tenant with no security and taking the chance on what kind of response I'll get when something needs doing, but alas I chose not to take the "free" money in the good times but have paid for it anyway while those who either overextended themselves or aren't paying the bills were let stay in the property anyway, and thanks to that, Government policy encouraging another housing bubble, and age I've probably now been priced out entirely - for NOT "going mad" in the Good Times!

It's not just the LL who has lost out and ultimately the tenants are the ones who are most impacted as the LL's "investment" is the tenant's home.

purplecow1977

Considering your average home can cost 1300 per month to rent, I'd find it difficult to stump up almost 4000 at one go

_Kaiser_

purplecow1977 wrote: »

Considering your average home can cost 1300 per month to rent, I'd find it difficult to stump up almost 4000 at one go

And this is why the market is unbalanced and heading for another crash.. because if you did have that sort of money to spare (and realistically its more as you need to allow for delays on getting the deposit back when you move) you'd be putting it down as a deposit.

I get that some LL's have been stung and want to "protect" themselves but they should be lobbying their TDs for a faster eviction process and escrow system, not trying to extort the tenant - because those like me who treat it as a professional service with obligations on both sides will take their money elsewhere than deal with that where no security is being offered in return.

firestarter51

purplecow1977 wrote: »

Considering your average home can cost 1300 per month to rent, I'd find it difficult to stump up almost 4000 at one go

But it's not common practice
At least not where I am
Months deposit and months rent in advance is all anyone I know renting has been asked for

3 months must be extremely rare

Graham

_Kaiser_ wrote: »

And I'd love to not be a tenant with no security and taking the chance on what kind of response I'll get when something needs doing, but alas I chose not to take the "free" money in the good times but have paid for it anyway while those who either overextended themselves or aren't paying the bills were let stay in the property anyway, and thanks to that, Government policy encouraging another housing bubble, and age I've probably now been priced out entirely - for NOT "going mad" in the Good Times!

It's not just the LL who has lost out and ultimately the tenants are the ones who are most impacted as the LL's "investment" is the tenant's home.

I got the bit about free money, I must have missed it too. Should I be resentful towards landlords, tenants or home-owners, your post doesn't make it too clear?

_Kaiser_

Graham wrote: »

I got the bit about free money, I must have missed it too. Should I be resentful towards landlords, tenants or home-owners, your post doesn't make it too clear?

This forum is overwhelmingly biased in favour of LL's which is fair enough I suppose given the obsession with owning property and negative equity that has led to thousands of accidental/reluctant LL's in this country.

But it's ironic to hear the complaining about tenants holding the last month's rent, or slow eviction processes - when on the flip side you have thousands still living in property that they're not servicing the mortgage on.

Yes there are bad tenants.. yes there needs to be faster ways to deal with these - but make no mistake... amateur/reluctant LL's are more the norm than bad tenants and yet this is conveniently skipped over by those LL's who think it's perfectly justifiable to demand more money for no security in return.

athtrasna

Graham wrote: »

I got the bit about free money, I must have missed it too. Should I be resentful towards landlords, tenants or home-owners, your post doesn't make it too clear?

Who got free money? A huge swathe of the rental market is made up of "accidental" landlords who moved out of their homes when they got too small or when they had to relocate. As someone who was one of those, the tax bill and other expenses meant it was loss making, but worth subsidising in the hope that it would one day get out of negative equity and it did. And then we got out.

Sad Professor

firestarter51 wrote: »

But it's not common practice
At least not where I am
Months deposit and months rent in advance is all anyone I know renting has been asked for

3 months must be extremely rare

It's rare at the moment, but with the current housing crisis landlords adopting the practice are bound to find some desperate tenant willing to pay it. And if the views of landlords in this forum are anything to go by, most of them would have no hesitation doing it.

ShaShaBear

The house we are living in is by far the cheapest rent-wise in my entire town if you look at Daft. Minimally it is €100 per month cheaper than the next step up which is actually a 1-bedroom apartment.
If, for some reason, I was forced to move out of here in a hurry, I'd need to scrape together €1500 to move based on this new deposit notion assuming I wouldn't have my deposit from here before I would need to secure the new place. Keeping in mind that this would be a family of four moving into a 1-bed apartment as the next cheapest option on the rental market in my town.

We would legitimately have two choices - cancel our wedding, or become homeless.