Rent in advance – why you shouldn’t accept it?
We all know that the prohibition of rent in advance is going to make life really hard for tenants who, for whatever reason, can’t pass normal referencing and until now would have paid rent up front to get the place they want. So it’s natural that people are looking for ways to get around this. I think that’s a really dangerous thing for landlords to get involved in, and in this note, I explain why.
Basically, the Renters’ Rights Act 2025 controls when and how rent can be paid in advance, principally by making amendments to the Tenant Fees Act. (TFA).
For new assured periodic tenancies, the position is broadly as follows.
- Any “pre‑tenancy” rent payment (ie rent paid before the tenancy agreement has been entered into by both parties) is now a prohibited payment under the Tenant Fees Act.
- Landlords and agents must not “invite or encourage” a tenant, guarantor or other “relevant person” to make such a pre‑tenancy rent payment, and must not accept it if it is offered.
- The only lawful pre‑tenancy payments remain the holding deposit and the tenancy deposit, within the existing TFA caps; “initial rent” can only be taken in a short “permitted pre‑tenancy period” once the tenancy has been entered into.
- Any requirement in a new tenancy agreement that the tenant pays rent in advance (for example more than one month at a time, or before the first day of a rental period) is unenforceable.
Existing tenancies in place when the new regime starts can continue to operate on their current advance‑rent arrangements (eg 6‑monthly in advance).
One of the suggested avoidance routes is the payment of a lump sum rent in advance to a third party who will hold it in escrow, which basically means they hold it on trust with an explicit instruction to release it when certain conditions are met.
So the lump sum rent would be paid to an agent or a solicitor, someone like that, with instructions to release it in tranches, usually monthly, as each rent payment date comes up.
But the RRA is drafted with explicit anti‑avoidance language so that a landlord or agent cannot do indirectly, via a third party or escrow arrangement, what they are forbidden to do directly.
The prohibition applies to accepting a prohibited pre‑tenancy rent payment “from a tenant, guarantor or any other relevant person”. I know guidance isn’t supposed to have the force of law but in practice it does and it makes clear that paying rent to a third party (for example, an agent, an associate, or an escrow service) with instructions to release it to the landlord on rent‑due dates will still be treated as a prohibited pre‑tenancy rent payment if the money is rent and is paid before the tenancy is entered into or in excess of the permitted period/amount.
If a lump sum is not clearly rent for identified periods, there is a risk it is characterised as a tenancy deposit; any amount held as security above five weeks’ rent would then breach paragraph 2 of Schedule 1 to the Tenant Fees Act.
In short, routing rent via escrow or a third party before the tenancy is properly in force, or in an amount or timing that is not permitted, is treated as an unlawful attempt to circumvent the statutory restrictions.
As you might expect, given the government’s anti-landlord mindset, there are severe penalties for breach of these rules. Two types of penalty regime interact here: the TFA regime for prohibited payments and the general RRA civil‑penalty framework.
• A prohibited pre‑tenancy rent payment under the TFA can attract a civil penalty from the local authority of up to £5,000 for a first breach, rising to up to £30,000 for a further breach within five years, as an alternative to prosecution. So let’s assume your tenant sets up escrow payments and these start running. At some point you fall out with your tenant and they go to the local authority. If you’ve accepted 6 monthly payments from escrow then that’s you saddled with a £30,000 fine .
• Under the wider RRA enforcement framework, local authorities can impose civil penalties up to £7,000 for first or minor non‑compliance and up to £40,000 for serious or repeat non‑compliance, with the option in serious/repeated cases of criminal prosecution carrying an unlimited fine.
• Tenants and the local authority can also seek a rent repayment order for continuing or repeated breaches where the landlord fails to remedy the breach (for example, by not promptly returning a prohibited rent payment).
Always remember, local authorities now have a statutory duty (not just a power) to enforce “landlord legislation”, and they have a direct financial incentive to find breaches and enforce the payment of penalties because they will keep the cash.
Still fancy trying this way of getting rent in advance payments from tenants?
I don’t.
https://www.gov.uk/government/publications/asking-for-rent-in-advance-guidance-for-local-authorities/asking-for-rent-in-advance-guidance-for-local-authorities
Michael
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Previous Article
Illegal Activity by Tenants – Are You Covered?
Member Since February 2022 - Comments: 206
9:23 AM, 24th December 2025, About 4 months ago
Reply to the comment left by Michael Rothchild at 24/12/2025 – 08:50
My understanding is that you cannot take rent in advance at start of tenancy but once tenant is in and after say the first month they then choose to pay you 6 months in advance this is allowed however not clear what if any additional paperwork is required.
Member Since October 2024 - Comments: 197
10:17 AM, 24th December 2025, About 4 months ago
Reply to the comment left by Jason at 24/12/2025 – 09:23
My understanding is once the tenant has signed the tenancy on the day of the start of tenancy, one month rent in advance can be taken and continue to take rent a month in advance but not ever take more than a months rent in advance, so a landlord or letting agent cannot take more than a month in advance.
This means people from abroad and tenants whose references fail and they are willing to pay 6 months in advance will need to be refused by the landlords and letting agents.
The government has made it difficult for both landlords and tenants, as they want huge penalties from the landlords. This means landlord hands are tied.
My question is if I have already taken rent before the RRB provisions came out, do I have return the rent by 30th April? Not only that the 2 tenants have requested to stay for 2 or 3 months extra. I shall need to ask this to the NRLA.
Member Since April 2018 - Comments: 374
11:04 AM, 24th December 2025, About 4 months ago
Reply to the comment left by Tiger at 24/12/2025 – 10:17
Yes you may wish to take expert advise on this but I would argue you took the rent in advance before that ban came in to place so even if you took 2 years rent in advance the new Act does not apply. It would be ridiculous if you then had to refund that to the tenant but then the RRB is ridiculous.
As for overseas tenants or others that fail references it would be a question of why they failed and landlords may still be happy to take them on without rent in advance.They may make better tenants than those with glowing references and letting is always a risk.
Member Since December 2025 - Comments: 1
2:40 PM, 24th December 2025, About 4 months ago
Rent in advance in the past has only ever occured when both parties agree to such terms. The Govt has the right to abolish said terms. Similarly as a Landlord I have the right subsequently to quit the market and to cease renting my great rental properties. Too many difficult and unacceptable regulations, costs and risks – especially regarding damage to property and what seems now, a virtually impossible or fair process of compensation. For myself at least, renting property is no longer a safe reasonable or profitable venture. I would be suprised if most private landlords are not already thinking of quiting, like i have.. Bye bye and good luck!!
If the Govt think they can treat private landlords eith such contempt, firstly they may find many landlords exiting the market, secondly a widespread shortage of reasonably priced rental properties and thirdly the Govt will consequently increasingly be having to meet a growing burden of homeless individuals, couples and families as a result. Who wins? Nobody IMHO.
Member Since November 2020 - Comments: 51
3:15 PM, 24th December 2025, About 4 months ago
In my manor of east London , offers of advance rent are a clear sign of a potential Grow and avoided even more that sub-standard tenants.
Lucky I no longer have these worries and will never grant a new tenancy.
Member Since February 2022 - Comments: 206
7:43 PM, 24th December 2025, About 4 months ago
Reply to the comment left by Londonlad at 24/12/2025 – 15:15
Failing to see the link between rent in advance = grow. If the landlord is loosing up checks just because they are offering rent in advance then on their head be it. Grow can be monthly too.
Member Since May 2023 - Comments: 225
10:51 PM, 26th December 2025, About 4 months ago
Reply to the comment left by Paul Elliot at 24/12/2025 – 14:40
Who wins?
A. Banks are investing in buy to rent on a large scale which allows them economies of scale.
B. Banks are buying significant buy to let portfolios to control the local market, with refurbishment and sale as their exit plan.
C. Banks are offering first time buyer mortgages on former BTL property to virtue signal to government and planning for a 25 year term or more.
D. Banks are engaging overseas investors willing to build a property business to shelter their money.
E. Banks are investing in UK property businesses willing to buy up BTL properties because they already have scale advantage.
In summary, the banks have leverage and government support because the bond market sets their borrowing costs so that every Chancellor must do as they are told…
Member Since February 2018 - Comments: 627
7:30 AM, 27th December 2025, About 4 months ago
Reply to the comment left by PAUL BARTLETT at 26/12/2025 – 22:51
“Who controls the food supply controls the people; who controls the energy can control whole continents; who controls money can control the world.”
Kissinger’s own aides denied he’d said that just before he died, Reuters denies, via Factcheck that ever said, well, similar version have been said for over a hundred an ten years and for most of that time we’ve had the sovereign immune Bank of International Settlement, the proof of the pudding is surely that whenever a “far right” government has actually confronted it, their people have been bombed and the national leaders often ‘unalived’, it’s criminal, just like a mafia.
Member Since July 2023 - Comments: 12
8:23 AM, 27th December 2025, About 4 months ago
I have a foreign student in my rented flat paying 6 months in advance by his rich African auntie. He has been there 2 years with no issues. Does this new law apply to him/me? Can I still accept his advance rent directly?
Member Since January 2015 - Comments: 1447 - Articles: 1
8:29 AM, 27th December 2025, About 4 months ago
It will be legal to take as many MONTHS in advance IF this is requested by the tenant(s), in writing.
What will be illegal is for the landlord to ask for more than 1 months rent in advance ie a lump sum for more than 1 months rent in advance.
So Landlords and agents will not be allowed to request or suggest the tenant pays a lump sum upfront.
The first month rental payments cannot be collected until after the tenancy agreement has been executed. But this is normal contract law – offer, acceptance, consideration.
https://www.gov.uk/government/publications/asking-for-rent-in-advance-guidance-for-local-authorities/asking-for-rent-in-advance-guidance-for-local-authorities
https://www.gov.uk/guidance/renting-out-your-property-guidance-for-landlords-and-letting-agents/rent-payments-and-deposits