A recent tribunal case has highlighted the impact of rent guarantee criteria on tenants with zero-hour contracts, which threaten to lock them out of the rental market.

The prospective Swindon tenant brought a claim to the First-tier Tribunal when his tenancy application was turned down, and his £196 holding deposit was not returned.

Although the tenant stated he was not on a zero-hours contract, the tribunal heard his role allowed him to choose what hours he wished to work. It found this “would reasonably be interpreted as a zero-hour contract”, meaning the landlord’s rent insurance criteria were not met.

Not accurate

It therefore ruled that the landlord had relied on information that was “not accurate” when accepting the holding deposit and that it did not have to be returned.

The ruling comes at a time when landlords have increasingly turned to rent guarantee insurance ahead of the Renters’ Rights Act to protect themselves against arrears.

Data from Goodlord shows a 41% rise in demand for rental protection products, following the Bill receiving Royal Assent. In a survey of 234 landlords and agents, 76% said the Act had increased their likelihood of taking out cover.

An absolute explosion in rent protection demand”

Oli Sherlock, Managing Director of Insurance at Goodlord, said the legislation had “focused minds across the sector”, adding there had been an “absolute explosion in rent protection demand” once the Bill passed.

Rent guarantee insurers, however, often have strict criteria. Tenant referencing requirements typically include confirmation that applicants are in permanent employment, with zero-hours contracts excluded as a condition of cover.