Government issues examples of rent in advance breaches under new rules

The government has published guidance for councils on when it is illegal for a landlord or letting agent to ask for rent in advance.

Under the Renters’ Rights Act, landlords and agents can no longer accept large amounts of rent in advance.

As previously reported on Property118, landlords can only accept rent in advance in certain circumstances, such as when the property is let by the council to a tenant who is legally homeless.

Landlords could face fines of up to £7,000 if they request rent in advance, as councils will have the power to take action against those who ask for payments before a tenancy agreement has been signed.

Councils can take enforcement action

In the guidance, the government says local authorities can take enforcement action and issue a civil penalty against a landlord or letting agent if the breach was committed with their consent or knowledge, or due to their neglect.

Under the Renters’ Rights Act, councils have the power to carry out surprise inspections, including entering premises where tenancy records are kept.

Councils say if a tenant has reported a landlord or agent for asking, inviting or encouraging them to pay rent in advance, they should provide:

• records or evidence of payment of rent in advance
• records or evidence of encouraging and accepting rent in advance such as text messages, voicemails, or emails

When defending themselves, landlords or anyone acting on their behalf should provide all relevant documentation, including:

• a copy of the tenancy agreement
• records of payments from the tenant
• steps to repay a payment of rent before it is due
• records or evidence of communication with the person

Examples of breaches

The government has also published a series of example breaches showing how landlords could fall foul of the new rules.

In the first example, the government outlines a situation where a landlord requires rent to be paid before the tenancy has officially been entered into.

The guidance says: “A tenant has viewed a property and would like to proceed with the tenancy. On payment of the tenant’s holding deposit, the landlord asks them to pay the first month’s rent and tenancy deposit at the same time as the tenant signs the tenancy. The landlord and tenant agree that the landlord will sign the tenancy once the tenant’s funds have cleared into the landlord’s account.

“This would be a breach of the rules on rent in advance as the landlord has required the tenant to pay rent before the tenancy has been entered into by both parties.”

The government also provided an example involving a landlord accepting an offer of rent in advance before the tenancy agreement is signed.

The guidance explains: “A tenant has viewed a property and would like to proceed with the tenancy. As the tenant wants to move quickly, they offer to pay six months’ rent in advance now to secure the property and enter into a contract. The landlord accepts this offer and once the payment of rent is received arranges for both parties to sign the tenancy agreement and for the tenant to move in.

“This would be a breach of the rules on rent in advance as the landlord has accepted an offer of rent before the tenancy is entered into.”

Another example covers landlords demanding rent earlier than the agreed payment date during an active tenancy.

The guidance says: “During a tenancy, a landlord requires the tenant to pay the rent before the day it is due and points to clauses in the tenancy agreement that allow this.

“This would be a breach as the landlord cannot require payment of rent before the payment date agreed in the tenancy agreement. Clauses of the tenancy agreement that allow the landlord to ask for payment early are of no effect and the tenant does not need to comply with this requirement.”

Scenarios that would not be considered breaches

The government has also provided examples of scenarios that would not be considered breaches of the rules.

One example involves a local housing authority paying rent in advance as part of its homelessness duties.

The government explains: “A local housing authority agrees with the landlord to pay rent in advance, to let to someone who is subject to a homelessness duty. They agree to pay two months’ rent in advance before the person signs the tenancy agreement and to pay an additional lump sum of rent every six months. The landlord accepts this and adds this to the tenancy agreement.

“This is not a breach of the rules on rent in advance. First, a local authority is not a ‘relevant person’ under the Tenant Fees Act 2019 and can make payments of rent before the tenancy agreement is signed. Second, this tenancy was agreed to meet the local authority’s homelessness duty. This type of tenancy is exempt from the rules on rent in advance once a tenancy has started, so the landlord can require the agreed regular lump sum every six months.”

The government also outlined an example where a tenant voluntarily offers to pay rent before it is due.

The guidance says: “During a tenancy, the tenant offers to pay the landlord the next two months’ rent in advance. The landlord agrees to this and accepts the payment.

“This would not be a breach as the tenant is free to pay rent before it is due, and a landlord can accept this.”