Implications of a tenant wanting to make a massive rental prepayment.

[007JamesBond]

I am looking to rent out my house. I've appointed an agent to manage the letting process but I will manage the property once we have a tenant as I will only be living 2 minutes from the house.

The agent has found a prospective tenant who has, without us even suggesting anything about pre-payment, offered to pay 24months of rent in advance. We don't know why he wants to do this. He says he will be based abroad for some of the year in a tax haven with the house being used by friends and family when he is not there.

Can anyone give me any advice about this, please? I'm wondering why he would make this offer, and I'm curious as to what implications this has on the rental contract, particularly regarding break clauses and our eviction rights.

Why does your husband believe logically this man wants to hand over a minimum of shall we say 14k? What does he gain? What does he have to hide?

bertieboo - yes it is.

Can you have a break clause if the money has already been paid? The op would have to pay the cash back to the tenant.

I'm just wondering….if everything checks out (at least officially) as far as the referencing goes, and who is to say you have your suspicions about cannabis farming or money laundering or whatever?) and you take the 24 months upfront……and you keep a very close eye on the property without him realising you are doing so…at the first sign of farming and before he's had a chance to do any real damage to the property, can't you report your suspicions to the police, get them arrested and then obviously evicted, and keep the rent? After all, who is going to come after you for it? Surely you wouldn't be obliged to give it back? The tenants would be in breach of their contract, that's not your problem…….you've just done what any concerned landlord would do and enforced the terms of the lease.

PoppyBlossom - DH works in the same industry as this guy and sees a lot of people with a lot of money. He says you can never tell why anyone with loads of money does anything but quite often they do very strange things with it. That's his stance at the moment. He sees uber rich people who have a very different relationship with money to the man on the street so I think this is why he's being more understanding (for want of a better word) of this.

I've done this twice and am doing it again next year.

When I sell my house I will be moving into an expensive rental market and will have 2 years cash. I can negotiate a discount and more importantly for me theres a massive disincentive to kick me out after six months coz your a new landlord who doesn't want to be a landlord.

Ihavenever I wonder if op and her husband could be chased for that money as part of a proceeds of crime bundle of cash?

You'd be aiding and abetting if the tenant is money laundering though.

Surely only if you knew before you took the money? Otherwise it's like saying that you were an accessory to murder because you let your house to someone who went on to murder a relative in it.

I don't know, but let's say they spent it in good faith, like any ill-gotten money that is handed over as payment for goods and services, if the recipient was innocent and unaware, and the money is gone, who is going to insist they pay it back?

this explains in more detail

But a brief summary;

The periods of the statutory periodic are defined as the payments for which rent was last payable under the fixed term (Church Commissioners v Meya looked at this in detail), hence the concern about the long notice.

What nationality is the prospective tenant?

It's not about having to pay the money back, it's about being prosecuted, convicted and imprisoned. Under UK money laundering laws, thinking "Hmm, this looks a bit iffy, oh what the hell never mind" is potentially an imprisonable offence.

But he's probably just a run of the mill cannabis farmer

Ihavenever I think he's British. He will be in Switzerland for four months of the year. He has a business registered there, but it looks to me like the business was only registered last month.

But who is to say what looks iffy and what doesn't? Many people would not have a clue about the what the signs of money laundering look like and many non-British tenants without guarantors do offer to pay 6 or 12 months up front as standard.

If the tenant is not previously known to you and the letting agent does their end and everything checks out as well as it can under the circumstances then who is to say to any landlord 'you should have known this was dodgy.'

I am about to take 12 months upfront from a group of 5 Chinese post-grad students. That's about 18k. If they were staying two years and I'd taken it that would be 36k and as I would be receiving it from 5 different bank accounts how would i ever be expected to know or suspect that the money all came originally from one dodgy source and had been spread around a bit to make it look legit? As far as I am concerned they are just rich international students with no guarantors, hence the upfront payment.

Is he in banking a finance? He may have just set up that company to pay a massive upcoming bonus into to avoid UK tax. To be honest if it's a central London place in an affluent built up area it's unlikely to be used for cannabis farming. I think they like out of the way places, away from prying eyes and noses.

Exactly, Ihavenever - I rent out a flat in a University town and it is quite common for international (esp Chinese) students to pay a year in advance. Our current tenant has paid 6 months in advance. Ironically if this guy had asked for a year in advance I think we wouldn't have been half as wary.

I don't think the tenant sounds dodgy in terms of what might happen to your house, but if he's British and earning megabucks and swanning off to Switzerland for tax purposes it does rather beg the question why does he need to rent your house? Can't he afford to buy his own? Especially as he doesn't really intend to live in it much.

Finance. It's a large rural house (not remote but in a country village, 30 mins from London). The front of the house is close to the road but it is a quiet road.

I think I'd be of the opinion that provided I thought the house itself was in safe hands, take the money and be damned. But cover your bases so that you cannot be accused of having known or suspected, if anything untoward comes to light later.

I've no idea. He says he's currently renting. I've tried to find him on 192.com and if he is the person I think he is then he's renting a 4 bed terraced house in a local city. It's slightly odd that he now wants to move to a much larger house in a village. I'd say he's in his late 50's or early 60's. He has the demeanour of a captain of industry, IYKWIM. He has a grown up son who lives in Australia, who is cited as being one of the friends and family who would stay in our house.

Cannabis er…..'entrepreneurs' are usually Vietnamese for some bizarre reason. I think if this guy has a city job that checks out then he's probably okay.

Have you Googled it op? I did from the tenants point of view and could see why a landlord wouldn't do this. Like most potentially dodgy things it may work out fine or might be a complete disaster. None of us know for sure.

On MSE the people I've asked there are all suggesting he's a front man for some big operation. I think that lot have been watching a lot of films.

People usually go to prison for money laundering - even just sending payments to jamaica via Western Union for a friend seems to be enough for some judges, don't do it!!!!

If they did turn the house into a cannabis farm and you then dobbed them in to the police, I'd be worried they'd send their mates round to get the advance rent back from you.