The rules around rent in advance changed significantly under the Renters’ Rights reforms, and landlords need to be careful about what they ask prospective tenants to pay before a tenancy begins.
Historically, some landlords have asked applicants to pay several months’ rent in advance, particularly where affordability checks were weak, the tenant had recently arrived in the UK, or a guarantor was unavailable.
That approach now carries greater legal risk.
What is the basic rule?
Landlords and agents need to distinguish between:
- rent that is due for the first rental period once the tenancy has been agreed; and
- large advance payments requested before the tenancy has properly started.
The new rules are designed to prevent tenants from effectively being required to pay excessive sums upfront simply to secure a tenancy.
That means landlords should review any standard procedure that asks for several months’ rent before the tenancy agreement is completed.
Can a landlord still ask for the first month’s rent?
Yes.
A landlord can still require rent that is properly due for the first rental period.
For a monthly tenancy, that will usually mean the first month’s rent.
The problem arises where the landlord or agent asks for additional future rent before it is due.
What about six or twelve months’ rent upfront?
This is where landlords need to be particularly cautious.
Requiring a tenant to pay a large block of rent in advance as a condition of being granted the tenancy may not comply with the new rules.
Landlords should not assume that a tenant’s willingness to pay automatically makes the arrangement safe.
The question is not only whether the tenant can afford the payment, but whether the landlord or agent has requested, encouraged or structured the deal in a way that breaches the statutory framework.
What if the tenant offers voluntarily?
This can be a more difficult area.
There may be circumstances where a tenant independently offers to pay rent in advance.
Landlords should be careful not to turn that into an informal requirement or to suggest that the applicant will only be accepted if they do so.
The safest approach is to keep clear written evidence showing how the arrangement arose and avoid pressuring tenants into offering advance rent.
Where there is any uncertainty, specialist advice may be appropriate.
Do not confuse rent in advance with a holding deposit
A holding deposit is different from rent.
A holding deposit may be taken during the application process, subject to the rules governing permitted payments.
It is generally intended to reserve the property while references and other pre-tenancy checks are completed.
Landlords and agents should not use a holding deposit as a way of collecting additional rent early.
Review your application process
Many rent-in-advance problems begin before the tenancy agreement is signed.
Landlords and agents should check whether application forms, emails, website wording or verbal scripts contain phrases such as:
- “six months upfront required”;
- “12 months’ rent preferred”;
- “pay more in advance to strengthen your application”; or
- “no guarantor means six months upfront”.
These statements may create problems under the new framework.
What should landlords do instead?
If affordability is a concern, landlords should focus on lawful and consistent applicant assessment.
That might include:
- income checks;
- references;
- credit information;
- previous landlord references;
- guarantors where appropriate; and
- other reasonable evidence of affordability.
The aim should be to assess whether the tenant can meet the rent, rather than shifting the entire risk onto the tenant through excessive upfront payments.
Agents need to update their systems too
Landlords who use letting agents should not assume that the agent’s old procedures have automatically been updated.
Ask the agent how rent in advance is handled and whether:
- staff scripts have changed;
- application forms have been reviewed;
- online listings have been updated;
- holding deposits are handled separately; and
- staff understand the difference between voluntary offers and landlord requirements.
A landlord should be able to explain the process used on their behalf.
What records should be kept?
Good records are essential.
Landlords should retain evidence showing:
- what rent was requested;
- when it became due;
- whether a holding deposit was taken;
- what the tenant offered voluntarily;
- any communications about advance payments; and
- when the tenancy agreement was completed.
This can be important if the arrangement is later challenged.
How is the position different elsewhere in the UK?
The rules described above apply to England.
Landlords should not assume the same system applies elsewhere.
Wales operates under the occupation-contract framework and has its own rules governing payments and contracts.
Scotland has separate tenancy legislation and its own rules around deposits, advance payments and prohibited charges.
Northern Ireland also operates under separate private-tenancy legislation.
Landlords operating across different jurisdictions should use procedures specific to each nation.
Review old habits now
Rent in advance used to be treated by some landlords as a straightforward way of reducing risk.
That is no longer a safe assumption.
The better approach is to use proper affordability checks, keep application procedures consistent and avoid asking tenants for excessive sums before the tenancy begins.
NetRent’s Landlord Legal Updates will continue to explain important changes affecting landlords, letting agents and tenants across the UK.
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Important information
NetRent does not provide legal advice. The articles represent our understanding of rental property law and are for general information only.