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.”
