Rent in advance ban risks excluding vulnerable tenants

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.”