Updating post from Reddit.
The Labour government will introduce new rules that cap advance payments at one month in the Renters Rights Bill. This is good news for your average tenant but not for those with issues securing a tenancy. A prospective tenant with no rental history or past credit issues has often turned to one solution to secure a tenancy - rent-in-advance.
Under the changes, landlords will still be able to ask tenants to pay one month’s rent upfront, alongside a deposit of up to six weeks’ rent as allowed under the Tenant Fees Act 2019.
This is not enough to provide financial assurance to landlords, who aim to mitigate the risks with rent-in-advance and with changes to make eviction harder and longer timeframe to obtain. The rental market is expected to see an increase in scrutiny and rejections of tenancies.
Chris Norris, of the National Residential Landlords Association (NRLA) said that banning landlords from asking for rent upfront was “cutting off any assurance responsible landlords might seek when renting homes to those who cannot easily demonstrate their ability to sustain tenancies and pay their rents.”
Rent Guarantee Insurance could play a more significant part as landlords look at insurance to mitigate the risks.
It is unknown how landlords who cater to international students, where rent-in-advance is commonplace, can now mitigate the risks.
Sources
EDIT: The Bill Amendment has been published. This amends the Tenant Fees Act 2019 so that rent in advance payable before the tenancy is entered into is a “prohibited payment” for the purposes of that Act. The new section 5A then also adds new prohibitions relating to that kind of prohibited payment.
OK so tenants who have no credit history or guarantor will now have to pay a company to act as a guarantor for them.
And rents will go up
Basically sums up this Labour governments policy. Sound good on paper for their voters ...put no actual thought or research in them....end up costing their voters more.
And landlords wont want that risk so it will still be a no
Rents will go up, that’s fine for half the politicians as they’ll have a portfolio. It’s all in the guise of helping tenants, when truth is, there isn’t any major issues with the current system providing your a good landlord and a good tenant. Support tenants more with livable standards, support landlords more against rogue tenants. Not much more too it. Like everybody has said, this just penalises a certain group of tenants, I’ve never known it be standard practice, nor seen a property advertised as 6-12 months rent up front, only ever heard of tenants asking for this
There's no reason rent should go up if the tenant is contracting with a company to act as a guarantor.
If the landlord has to purchase the insurance themselves I'd expect that to be passed on.
There's a risk of 'double insuring' though which is just a deadweight cost.
What are these companies that act as guarantors for tenants?
I'm not sure they exist yet, but, its clearly a way this risk could be pooled. I mean, rent guarantee insurance already exists and there's no obvious reason a tenant couldn't buy it and point it to the landlord(?)
And you can guarantee they'll be like insurance: all smiles and promises, until something goes wrong - when they tell you to do one.
And prices will go up as a result.
Not just those with poor credit or no history.
My previous tenant was a short term tech contractor and he gave me tales of his struggles to get approval to rent as he looked jobless for half the year.
His earnings were excellent however and had plenty of cash available, so had rented most of his previous properties by offering a year in advance.
When I gave him 9 months notice that I wanted to move back in, he actually left after one month because he was currently in contract work and it would make it easier to find a place. A few months later when that contract ended he felt he would have much more trouble.
For the record: We took him on with standard 1 month in advance as we worked in similar enough fields I could sound him out, liked him and trusted his financial story.
I’ve done it a few times, if I can’t in the future no biggy for me…. Tenants, for me typically foreign nationals are just not gonna be able to rent.
Labour want rents to go up. It’s good for them. It gives their voters a reason to be angry with someone (greedy landowners) who isn’t Labour. That’s exactly how Labour wins votes.
The bottom line is that no matter what the politicians do, I know that landlords will not operate at losses for protracted periods of time. So, this govt can squeeze landlords all they wish. Landlords are just middlemen offsetting the cost of long term ownership vs the accessibility of short term rental agreements.
Houses are easy to sell. Landlords with leverage costs running on tight cash flows will be incentivised to sell, or at least not expand. Rents will go up and up and up.
This won’t help anyone. My last 2 tenants both offered rent in advance to secure the property I didn’t ask. 1st family were from Romania back when migrants were welcome worked hard never missed a payment it everyone said no Ann credit history or rented in the UK previously. Second family were bankrupt again hard working but computer said no. Again great tenants still there and I imagine with these discriminatory policies won’t be going anywhere for a long time.
Oh look another policy that will.....discriminate against renters and.....make rent go up?
Hows that vote feeling now tenant labour voters? LOL
Feels like prices are already maxed in terms of affordability so good luck with that
How much has minimum wage gone up? Perhaps we should just pocket that increase, good place to start right? /s
Will happen regardless. Laughable to suggest otherwise
Like the tories ever helped renters out either. Tories put the tapering tax rules in place which certainly raised rents.
My point is all governments love a scapegoat- and landlords are a great scapegoat!
Nothing this government has done will lead to fairer rents or a higher pool of available properties. To me, it seems like they've pretended that they are doing all of this for the renters when, in fact, they are doing it for the big players, banks, and corporate laandlords, tenants will just pay more for less and landlords will have no choice but keep passing these additional risks and costs on. The mass selling they pretend will come, and the subsequent pool of cheaper properties to buy is a false narrative. If this was the case, why are banks and corporate landlords buying more? Why wouldn't they wait for the exodus of private landlords and snap up all of these cheap properties?
Think we will get renters insurance of some sort to back up renters. Landlords are being hounded as usual.
I do think Rent Guarantee Insurance will play a bigger part after Labour Reforms, but I dont see an insurance company offering that for say Student Tenants with no UK History.
Yeah you’re right. As usual us landlords have to pick up the slack for the government. Provide housing with no benefits. Why we keep making us look like mugs. Sorry but your rent is going up again. Blame the government for that.
They do not pay out on most tenants because one metric is usually that the tenant must pass checks and in some cases have assets (a lot of tenants have no assets) so these types of payouts are usually voided when the landlord comes to claim.
Umm when does this kick in ? Just last week I’ve had a new tenant in who paid 6 months upfront - as requested by them due to starting a new contract role.
Your fine, not for a long-time yet. Its 3rd reading in parliment started 14 January 2025. Then it has to go through the house of lords.
Phew ok thanks!
Tenant sets up a seperate loan account, managed by the landlord. interest is paid to tenant monthly, and the rent paid from that account.
This would be a seperate loan agreement from the tenancy agreement.
Would that work?
Also some tenants pay 1month and a few days earlier, would this be affected?
Works if you have a credit licence I guess. Might suit corporate landlords.
I'm already only accepting tenancies with home owning guarantors. I'm not willing to risk three months rent before starting eviction proceedings with nobody to claim back from.
I'm still getting multiple applications on properties. I hope Labour/Shelter/Acorn/Generation Rent are happy they're screwing over tenants more than they are landlords.
Some of the responses on this are absolutely mind blowing, the entitlement.
If someone wants to pay you 6 months rent up front there's nothing stopping them, you just can't make it a requirement or contractual.
Now you'll have to make it worth your customer while doig so.....
Waahhhhhhhhhhhhh
What happens if the request is made by the tenant?
Or will the year up front be able to be put into an escrow and drip fed at an agreed draw down?
(I haven’t read the article)
As far as I understand, the landlord has to decline it.
I'm surprised to see so many people here mention they use rent in advance. I've never seen that at places I've rented. Can't landlords just take the risk as a month plus deposit should be enough.
It's more of a way for sub-par tenants for securing a tenancy than the norm. Think someone with adverse credit history who'd fail credit checks. They by default will be declined as high risk unless they can provide a home owning guarantor or rent in advance.
1 month and the capped deposit is not enough. By time tenant fails to pay the 1 month has "gone". A tenant can hold payments for 2 months until the landlord can serve notice, another two weeks until you can serve court papers, months wait until a court hearing and months until bailiff's. A few weeks capped deposit ain't going to cover that, nevermind the typical damages that come from tenants who go through this and are pissed at the world and their landlord.
Rent in advance does work to the landlord's advantage though because then the tenant doesn't have any comeback if the landlord fails to uphold their end of the deal by failing to make repairs, etc. If the tenant can demonstrate that they have enough money in their account so that they could have paid the rent upfront if it were (still) allowed (and continue covering their basic living costs also) then that ought to be enough. If you really need high security then the correct mechanism to use would be to use an escrow account where the tenant's future rent money is ringfenced from their other money and made inaccessible to them and then subsequently released as monthly payments to the landlord with the tenant's approval.