As the private rented sector awaits the Renters’ Rights Bill, landlords are anxious to prepare for the new rules.
Let’s look at an important area: rent in advance. How can landlords get ready for some significant changes?
The Renters’ Rights Bill aims to ‘end the practice of landlords demanding large amounts of rent in advance from tenants’. According to the government, this is an unfair practice that can put strain on tenants’ finances and stop them from moving home.
Of course, it’s worth improving renters’ rights, especially when it comes to protecting their standards of living. But there are also solid reasons why a landlord might ask their tenant to pay more up front – for instance, if they don’t have a decent credit history or are new to the country. By asking for, say, six months of rent in advance, the landlord can lower their financial risk.
How the rules are set to change
As soon as the new bill comes into effect, landlords and lettings agents will only be able to require or accept the standard one month’s rent (or 28 days’ rent for tenancies with rental periods of less than one month). They can’t add extra days to the first month for the sake of aligning calendar dates.
And if they break these rules? The local council can fine them.
Things to keep in mind
The rules apply to new tenancies, not old ones
Chances are, you’ll have tenancy agreements that start before the bill’s official commencement date. (This date is yet to be confirmed, but will likely be in early 2026.) In this case, you can continue with the contractual arrangements for the duration of the tenancy. No recalculating a tenant’s rent!
The insurance industry will offer solutions
As the market adjusts to the new bill, the insurance industry will likely plug some gaps. For example, if a potential tenant doesn’t meet your referencing criteria or have a private guarantor, they may be able to take out insurance designed for this scenario.
It will still be possible to receive rent in advance once the agreement begins
According to the government website, ‘tenants will remain free to pay prior to the rent due date should they wish to do so.’ This applies once the tenancy agreement has begun and must be voluntary. Sometimes people may want to pay before Christmas or a holiday, for instance.
However, landlords must be careful in how they handle early payments. You can’t be seen to accept rent as an incentive to enter into a tenancy. So, for instance, it might be dicey to rent to someone who hasn’t passed their referencing if they offer to pay more rent shortly after the tenancy has begun. Be wary of inviting, encouraging or accepting a prohibited pre-tenancy rent payment.
Keep an eye on further changes
While most elements have been decided, the Renters’ Rights Bill is yet to receive Royal Assent. Look out for more articles here on the Winkworth blog. And, if in any doubt, talk to a tenancy law expert for professional advice on your business.
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