Renters' Rights Bill could see tenants move in without paying rent

Steve Lumley·24 January 2025·5 min read
Renters' Rights Bill could see tenants move in without paying rent

Concerns have been raised by one PRS expert who warns that tenants - including overseas students - could occupy properties without paying rent once the Renters' Rights Bill is enacted.

That's because the Bill will ban any rent payment before a tenancy agreement is signed, and landlords could face fines for accepting such payments.

The head of lettings at real estate firm Knight Frank, Gary Hall, said: "These amendments to the Renters' Rights Bill are bad news for landlords.

"Under the amendments, any payment of rent made before a tenancy agreement is signed will be a prohibited payment."

Landlord could face local authority enforcement action

Mr Hall explains: "If a landlord invites, encourages, or accepts such a payment, the landlord or their agent could face local authority enforcement action and a fine.

"The big problem with this is often tenants want to move into a rental property quickly - sometimes in a matter of days - and transfer of funds can take 3-5 days, sometimes more if coming from overseas.

"Tenants will want to be able to make one payment covering rent and deposit as soon as possible to avoid multiple bank charges or the admin of making multiple payments."

He adds: "The government needs to see sense and allow rent at the start of a tenancy to be paid before a tenancy agreement is signed and before the start date of the tenancy.

"The current framework puts landlords and agents at constant risk of enforcement action for something that is out of their control.

"It is also unfair for a landlord to be at risk of a tenant moving into a property without the first month's rent paid."

Parliament's move to ban rent in advance

Another critic of the government's move is Heidi Shackell, the chief executive of The Lettings Hub, who expressed disappointment over Parliament's move to ban rent in advance.

She emphasised that policy decisions should consider the broader context of the current housing crisis, warning that this amendment will shift how landlords assess risk.

Ms Shackell said: "Many tenants who rely on rent in advance to secure housing will now find themselves denied tenancies by landlords.

"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."

Housing will be easier to access

She continued: "Contrary to the picture painted by the housing minister that suddenly housing will be easier to access for some tenants, the opposite will be true.

"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."

Ms Shackell says she will now compile an open letter with an in-depth analysis of rent in advance data for the House of Lords to consider.

She adds: "Whilst it is vital that policy makers are aware that a ban on rent in advance is not the panacea for an already strained housing market, our sector has risen to the challenge of planning for the once unfathomable and impossible abolition of Section 21 Notices, and I am confident the industry will do the same with the removal of rent in advance payments."

'Significant challenges for landlords'

Simon Thompson, the managing director of Accommodation for Students, said: "The Renters' Rights Bill, as it stands, could lead to significant challenges for landlords, particularly those renting to overseas students.

"The prohibition on rent payments before a tenancy agreement is signed means landlords are at risk of tenants moving in without paying rent upfront."

He added: "This amendment could deter landlords from renting to students who often need to secure accommodation quickly and may not have a UK-based guarantor."