Major estate agencies have reported that the ban on rent-in-advance payments under the Renters’ Rights Act is preventing vulnerable tenants from accessing rental properties, contrary to the legislation’s intended purpose.
Executives from LRG and Connells have independently raised concerns that the prohibition is particularly affecting overseas students and tenants with poor credit ratings who previously used advance payments to secure accommodation.
Impact on tenants with poor credit
Helen Charlesworth, Chief Executive of Connells, cited the case of an NHS nurse with three children who was served a Section 21 eviction notice before the Act came into force. Despite having 12 months’ rent saved and a history of timely payments, the nurse could not secure alternative accommodation due to a poor credit rating and the inability to offer rent in advance.
“So one of our nation’s nurses is now made homeless by the Renters’ Rights Act – so this needs looking at, and we’re relaying these types of stories to our contacts in Government,” Charlesworth said.
International students affected
Allison Thompson, Chief Lettings Officer at LRG, highlighted that international students have been particularly impacted. “The ban has been a particular problem for international students, who used to be able to offer several months’ rent in advance if they couldn’t satisfy all the referencing criteria,” Thompson stated.
Thompson noted that with the removal of Section 21 evictions, landlords have become more risk-averse. She suggested that tenants could instead offer guarantors as an alternative solution, which has historically been used by students and others who struggle to meet financial referencing requirements.
The concerns come as the government has introduced other measures affecting renters, whilst also implementing changes to property transaction costs.
Industry response
Both agencies stated they support the overall objectives of the Renters’ Rights Act but are communicating these unintended consequences to government contacts. The ban on rent-in-advance payments was designed to protect tenants from financial barriers to entry, but industry figures had predicted potential negative outcomes for certain tenant groups.
The issue highlights the complexity of rental market regulation, where measures intended to improve tenant protections can inadvertently restrict access for those with non-standard financial profiles. The government has not yet responded to these specific concerns raised by the letting industry.
