Ban on Upfront Rent for Landlords

The government will introduce new rules that cap advance payments at one month in the Renters Rights Bill. This is good news for your average tenant but not for those with issues securing a tenancy. A prospective tenant with no rental history or past credit issues has often turned to one solution to secure a tenancy - rent-in-advance.

Under the changes, landlords will still be able to ask tenants to pay one month’s rent upfront, alongside a deposit of up to six weeks’ rent as allowed under the Tenant Fees Act 2019.

This is not enough to provide financial assurance to landlords, who aim to mitigate the risks with rent-in-advance and with changes to make eviction harder and longer timeframe to obtain. The rental market is expected to see an increase in scrutiny and rejections of tenancies.

Chris Norris, of the National Residential Landlords Association (NRLA) said that banning landlords from asking for rent upfront was “cutting off any assurance responsible landlords might seek when renting homes to those who cannot easily demonstrate their ability to sustain tenancies and pay their rents.”

Rent Guarantee Insurance could play a more significant part as landlords look at insurance to mitigate the risks.

It is unknown how landlords who cater to international students, where rent-in-advance is commonplace, can now mitigate the risks. Many insurers do not cover students and, more specifically, international students.

Sources

• UK Parliament - Bill Amendment This amends the Tenant Fees Act 2019 so that rent in advance payable before the tenancy is entered into is a “prohibited payment” for the purposes of that Act.
• The Mirror
• i News