Minister says ‘rent in advance’ of more than a month to be outlawed
Matthew Pennycook says he is looking into adding the ban into the Renters' Rights Bill, saying such requests are 'extortionate' and unfair.
Letting agents and landlords are to be prevented from asking tenants for more than one month’s rent in advance, it has been confirmed.
In answer to a question from Labour MP Simon Opher in Parliament yesterday, housing minister Matthew Pennycook said he wanted to see the practice outlawed and that he was looking into ways of achieving including via an amendment to the Renters’ Rights Bill.
“The Government recognise that demands for extortionate rent in advance place a considerable financial strain on tenants and can exclude certain groups from renting altogether,” he said.
“We are very clear that the practice of landlords demanding large amounts…must be prohibited.”
Beyond doubt
The Minister also said that although the new periodic tenancies that will replace the current fixed-term assured shorthold tenancies would in theory prevent rent being charged in advance, “we believe there is a strong case for putting this matter beyond doubt,” he said.
What Pennycook has not considered given his response is that ‘rent in advance’ is one of the key ways that landlords and agents insure themselves against prospective tenants who fail referencing or are high risk, in particular foreign students who have no renting or financial track record in the UK.
A recent survey by tenants’ rights group Acorn found that half of renters it canvassed reported being asked to pay a month’s rent in advance while 23% reported a request for six months.
Landlords have only limited options when tenants are from high risk groups such as those who have built up rent arrears in the past or who have CCJs against them and rent in advance is one of the most commonly-used approaches.
We let to accommodate 3 tenancy situations;
1 tenants who pass financial referencing take a fixed term tenancy paying rent monthly
2 tenants who pass referencing except financial take a tenancy for 12 months with a guarantor who passes financial referencing and lives in England or Wales
3 tenants who pass financial referencing, who dont have a guarantor nor a suitable guarantor take a tenancy for 12 months paying 12 months rent in advance
The Government’s renters Reform bill when it becomes law already removes option 3 from the list above regardless what extra measures are passed to prevent taking rent in advance.
Typo
3 tenants who pass referencing except financial referencing but cant provide a suitable guarantor take a tenancy for 12 months paying 12 months rent in advance
As Murray Lee aptly describes, this represents yet another significant blow to our industry. The Government must gain a clearer understanding of the rationale behind the practices adopted by reputable agents and landlords. The portrayal of some agents and landlords as simply “greedy” for requesting up to six months’ rent in advance is both misleading and reductive. In reality, such measures serve as a form of insurance, enabling tenants who might otherwise fail referencing, to secure housing. If the Government insists on these changes, the likely outcome will be the exclusion of high-risk tenants, leaving them with fewer options. In the current housing crisis – exacerbated by Government policies – landlords are understandably cautious and no doubt will select tenants with lower risk profiles even more so.
Another minister sharing the single government brain cell for a day! What on earth do these people have between their ears? What about people returning from abroad, single parents leaving the marital home, pensioners with no income?
I have said so many times that housing needs to be taken away from government entirely and passed to organisations with skin in the game – not property mark btw!
Another “nail in rental coffin” Dont they think these things through. Not all our tenants pass referencing esp if new to the country so it the only way they could be considered for an AST by paying 3 or 6 months in advance . Admitedily that’s not a security for the next 3-6 months but at least if gives them an option. #shortsighted
They certainly making it harder for low guarantor tenants to get a house aren’t they. Would the Govt like us to pay their month in advance next?