Rent in advance: the rules before the agreement is signed

The current rules

As it stands, many landlords accept rent in advance to increase their financial security. For instance, they might ask for six months of rent upfront if a tenant has a poor credit history or has recently moved to the country. This helps landlords feel confident they won’t be out of pocket if their tenant later struggles to make payments.

However, the Labour government believes this is an unfair practice that can strain a tenant’s finances and limit their ability to move home or even exclude them from the market altogether. Specifically, rent in advance can lead to bidding wars where prospective tenants offer large sums to secure a property. This has become a growing problem in recent years, particularly in competitive markets like London and Brighton. Families and individuals can end up stretching their finances to outbid other people.

The new rules

Given Royal Assent last autumn, the Renters’ Rights Act 2025 (RRA) seeks to improve the lives of tenants in the private rented sector. In this case, the legislation amends the Tenant Fees Act 2019 by banning the practice of rent in advance.

Although this means less flexibility for landlords, the big advantage is that everything is set down in writing so that everyone knows what’s expected of them.

From the 1st of May onwards, landlords must:

• Never require any rent in advance from their tenants before the rental agreement is signed
• Refuse any offers of early rent payments from tenants who hope to secure a property
• Apply these rules for new assured tenancies entered into on or after the 1st of May in England (they don’t apply retrospectively to agreements signed before the 1st of May)

Please note: landlords can still take a holding deposit – capped at one week’s rent – from the tenant to reserve the property while they complete the checks. This element of the Tenant Fees Act 2019 will continue unchanged under the Renters’ Rights Act. Read more details on the government website.

What happens if landlords don’t follow the rules

As of December last year, the RRA has given local authorities greater powers to enforce the rules. If a landlord or letting agent breaks the rules for rent in advance, the local council can impose a civil penalty of up to £5,000 for a first breach and £30,000 for repeat breaches within five years. They may also require them to repay any rent taken unlawfully.

Final thoughts

While many landlords already treat their tenants fairly, the new rules aim to formalise how the system works and protect people from bidding wars. We recommend that people in the industry familiarise themselves with the revised way of working to make sure they know exactly how to prepare. Check out our post on the rules after the agreement is signed. And keep tuning into the Winkworth blog for further news and updates.