Rent in advance ban risks excluding vulnerable tenants

Rent in advance ban risks excluding vulnerable tenants

0:01 AM, 17th January 2025, About a month ago 11

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The Lettings Hub chief executive, Heidi Shackell, has expressed her disappointment over the decision in Parliament to ban rent in advance, warning that it could have unintended consequences for vulnerable tenants.

After the Renters’ Rights Bill was voted through Parliament to move onto the Lords, Ms Shackell said: “Policy decisions should be made in the broader context of the current housing crisis.

“However, the real-world impact of this amendment will be a shift in how landlords assess risk, ultimately creating more obstacles for marginalised tenants.”

She adds: “Many tenants who rely on rent in advance to secure housing will now find themselves denied tenancies by landlords.”

Competition for rental properties

With an average of 17 enquiries per available rental property on Rightmove, competition for rental properties is fierce, she says.

That means landlords have the advantage of selecting from a wide pool of applicants.

Ms Shackell explains: “Tenants often opt to pay rent in advance for various reasons, such as lacking a UK-based guarantor, affordability or even aiming to strengthen their rental application in a competitive market.

“The alternatives proposed by MPs, for example, obtaining a guarantor or purchasing landlord insurance, are not always accessible.

“Not all tenants have a suitable guarantor, able or willing to be responsible for what, under Renters’ Rights, will be an open-ended rental agreement.”

Rent and legal protection

Ms Shackell continued: “Meanwhile, insurance options such as rent and legal protection require the landlord to obtain an acceptable tenant reference decision as part of the underwriting criteria; these landlords and tenants won’t have that.”

She also says that contrary to the housing minister Matthew Pennycook’s suggestion that the ban will improve housing access for some tenants, Ms Shackell believes the opposite will be true.

She said: “The decision made will make it more challenging for those who already face significant hurdles in securing housing and every refused tenancy can lead to a desperate tenant unable to move forward with their life plans.”

Tenants paying the highest rent

Data from The Lettings Hub reveals that 15% of tenants paying the highest rent amounts – £5,000 and above – rely on paying rent in advance.

That compares with just 6% of tenants paying £1,000 or less per month.

Across all rent price bands, only 7% of tenancies begin with an upfront rental payment.

Ms Shackell says: “We will now compile an open letter, including in-depth analysis of our rent in advance data for consideration by the Lords, ensuring that the real voices of tenants who don’t fit standard criteria are heard when the Bill continues its passage through Parliament.”


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Reluctant Landlord

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8:41 AM, 17th January 2025, About a month ago

agreed.

Moreover this will shoot councils directly in the foot. How are they now going to secure properties from the PRS for vulnerable tenants?

Bad enough for the LL to hope and pray that the T personally themself pays the RIA after they sign the contract - but a LL handing over the keys to a benefit tenant (who has already no skin in the game) and only then trying to secure the RIA etc from the benefits department/third party?????

This just makes it more risky than it was before so..... I'm OUT!

Cider Drinker

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10:03 AM, 17th January 2025, About a month ago

Even today, no landlord worth their salt would offer a property to a tenant that couldn’t pass affordability checks. Once the RRB is enacted, it would be even more stupid to do so.

It’s the migrants from places like Hong Kong that will suffer most. High net worth but no UK credit history.

Dylan Morris

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10:58 AM, 17th January 2025, About a month ago

They’re just regulating the PRS out of existence. But surely all this meddling is going to affect the large corporation landlords as well ? Will it put a dampener on the build to rent sector ? They’ll also not be able to issue Section 21 and experience horrendous Court delays if they have a problem tenant etc.

John Gelmini

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10:34 AM, 18th January 2025, About a month ago

The bill is designed to regulated small private landlords out of existence and have the way for major landlords like the Lloyds Bank subsidiary waiting in the wings,Legal and General and the fund management subsidiaries poised to by price distressed properties from landlords selling up.
It is also designed along with "Selective Licencing" schemes to force small landlords to sell up and effectively gift their properties to greedy and largely incompetently run local authorities nearly all of which are 80% overmanned.
" Vulnerable tenants" and the unbanked, uncreditworthy and very poor are the new paupers and lepers of the modern age.
None of the main political parties cares anything about them and the media won't report about them .
The new major landlords will cherry pick the best tenants and the ranks of the homeless will grow whilst the public sector and trades unionist train drivers will prosper until AI and humanoid robots take their jobs.

Londonlad

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10:56 AM, 18th January 2025, About a month ago

Always avoided anyone offering rent in advance, sure sign of a potential grow !

Godfrey Jones

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14:39 PM, 18th January 2025, About a month ago

I've had 2 separate tenants over the years who wanted to pay upfront. One was a house I was letting just for 12 months. He paid me the full 12 months, was a model tenant and as my situation had changed by the end of our Agreement he ended up staying 10 years in total. The second wanted to pay 6 months in advance. I obviously accepted and she also turned out to be a good tenant who stayed 4 years. Nothing dodgy whatsoever.
I did NOT take a deposit with either, in fact I don't take deposits full stop as I have previously had a very bad experience with the Tenancy Deposit Scheme.
So after the RRB are they really asking us not to take 6 or 12 months money when it's offered? Or is taking money, especially under tables, in brown envelopes just for MP's and those that award Gov contracts?

christine walker

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10:22 AM, 22nd January 2025, About 4 weeks ago

I would never let a tenant move in until the rental agreement is signed anyway. The first months rent is always paid one month in advance

Tiger

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10:27 AM, 22nd January 2025, About 4 weeks ago

Reply to the comment left by Godfrey Jones at 18/01/2025 - 14:39
As I understand, a tenant can offer 6 to 12 months rent in advance but the landlord cannot ask. So I believe if someone offered it, it needs to be in writing to avoid any contradictory consequences later on.
This is great worry for landlords who rent to international students, like Ciderdrinker stated earlier on. I have had tenants from Hong Kong and China who pay 6 months in advance and then 4 months later another 6 months. This is in the tenancy agreement. But I believe in these circumstances, landlords will not be able to state anything about advance payments.

Tiger

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10:46 AM, 22nd January 2025, About 4 weeks ago

The councils are supposed to look after their local constituents or local citizens welfare. However they take the council tax and some of them have invested in shopping centers and other foreign banks and lost a lot of money. Now to allow rescue for their bad investments, they want licensing of properties to recoup their losses and government making stupid and unfair laws to protect themselves from looking after the vulnerable people. They are not fit for purpose and sooner or later there will be riots or demonstrations against these so called laws. What we need is just an operational councils, who should not have powers of decision making. There needs to a committee of working and non working people to meet up once a week or month to discuss what is needed to be done and where the money is needed and spent. So the councils can carry out. It is not the councils job to invest the citizens money on useless investments ventures or spend it the way they want. Every penny needs to be decided on and utilized according to the needs. I believe we will not have homelessness, if we had proper workmen to carry out maintenance if council properties and no stupid laws to keep tenants in a property if they do not pay rent without reasons. 2 months and they need to be out to make room for people willing and able to pay rent.
Councils the way they are behaving needs to be in the past and new beginnings is required and thinking out of the box.The council staff are not qualified to make judgements on investments and not be allowed to fritter away the citizens funds, whether received via council tax, parking fees, from traffic in bus lanes or accessed to roads not allowed to enter fees, etc. Councils have earned a lot of money but they have no idea how to spend for real needs. It is supposed to be non profit making and just exist for the service of citizens requirements, welfare, schools, maybe roads and where new requirements, discussion based by people wishing to help out with their time voluntarily. Local people decide on what staff are required in the councils with what qualifications. They need to understand that investment is not needed unless it is housing for welfare of vulnerable people.

Steve Masters

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12:25 PM, 22nd January 2025, About 4 weeks ago

As I see it there is nothing to stop doing things all in one go, sign the tenancy agreement, guarantors sign, start rent guarantee insurance, pay the rent and hand over the keys.
Who's to say what order this was actually done in on the day if everything is dated the same day.
So long as applicants and guarantor have been thoroughly referenced and rent grantee insurance approved then once the tenancy is signed then the first month's rent shouldn't be at risk anyway. Is the tenant going to sign the tenancy and then run off with it without paying the rent and getting the keys. Not very likely.

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