A leading rent guarantor company has reported the highest level of demand for its services as many landlords and agents realise ‘rent in advance’ will banned under the Renters’ Rights Bill.

Rent Guarantor has told The Neg that it expects another huge spike in demand for ‘professional guarantors’ and that it is tooling up to be ‘ready to meet this need’.

It is clear that the wider landlord and letting agency world is only now waking up to the challenges that the Bill – once it becomes legislation most likely in early January next year – will as it currently stands end the practice of landlords or their agents asking for large amounts of rent in advance from tenants looking to secure a tenancy.

Describing it as an ‘unfair practice’ the Government says rent in advance encourages prospective tenants to stretch their finances to the limit, “preventing them from moving within, or accessing the sector altogether”.

Once enacted, the Renters’ Rights Bill will amend the Tenant Fees Act 2019 to prohibit landlords or letting agents from requiring or accepting any payment of rent in advance of the tenancy being entered into.

A landlord will only be able to require up to one month’s rent or 28 days’ rent for tenancies with rental periods of less than one month once a tenancy agreement has been signed and before it begins.

Also, the renting reform legislation will amend the Housing Act 1988 to provide that, once a tenancy begins, a landlord will be unable to enforce any terms in a tenancy agreement that require rent to be paid in advance of the agreed due date.

Safeguards

A Rent Guarantor spokesperson, commenting on what the legislation will mean for the private rented sector says: “Better safeguards will protect everyone and unlock tenancies.

“Tenants will be further empowered to make their own choices, and to choose a suitable solution to help them secure a rental home.

“A professional guarantor provides peace of mind for landlords and lettings agents under the new rules. Landlords know the value of stable, long-term tenants.

“The issue will no longer be about how to remove a tenant — it’s about how to assess one properly, and how to ensure that rent continues to flow even when tenants face unexpected difficulties.

“Our professional guarantor service provides an option for tenants considering the best solution to meet their needs. We are underwritten by insurance to provide tenants, landlords and agents with reassurance and peace of mind, but we don’t offer an insurance policy product.”

The firm says that its internal data suggest that between 15% and 30% of all tenancies currently involve a rent guarantor but that this percentage is likely to be much higher because it doesn’t include people who wouldn’t normally reach the reference stage, because the landlord or letting agent rejects their application much sooner.

“The vast majority of tenants using our service are not ‘bad’ tenants.

It adds: “The vast majority of tenants using our service are not ‘bad’ tenants.

“They are students, employed people or those in receipt of benefits who cannot provide a suitable UK guarantor to satisfy the needs of their tenancy.”

But as several high-profile national newspaper articles have revealed recently, there are concerns that some property firms have in the past made rent guarantor products a condition of being put forward for tenancies.

In response to this, Rent Guarantor says: “We believe in empowering tenants with choices.

“As a commercial entity, we offer discounts and revenue share to our partners to help promote our product, however we work extremely hard to ensure it is presented as one of a suite of options to consider. We provide detailed sales training, along with scripts to assist, to make sure there is total clarity on this point.”