A tribunal ruling has exposed how rent guarantee insurance criteria are preventing workers on zero-hours contracts from accessing rental properties, raising concerns about market accessibility as landlords increasingly adopt such policies.
A prospective tenant in Swindon brought a claim to the First-tier Tribunal after his tenancy application was rejected and his £196 holding deposit withheld. The tribunal heard that whilst the applicant stated he was not on a zero-hours contract, his employment allowed him to choose his working hours. The tribunal found this “would reasonably be interpreted as a zero-hour contract”, meaning the landlord’s rent insurance criteria were not satisfied.
Holding deposit ruling
The tribunal ruled that the landlord had relied on information that was “not accurate” when accepting the holding deposit and determined it did not have to be returned to the applicant.
The case emerges as landlords have substantially increased their use of rent guarantee insurance following the Renters’ Rights Act receiving Royal Assent. Data from Goodlord indicates a 41% rise in demand for rental protection products in response to the legislation. A survey of 234 landlords and agents found that 76% said the Act had increased their likelihood of taking out cover.
Oli Sherlock, Managing Director of Insurance at Goodlord, said the legislation had “focused minds across the sector”, noting an “absolute explosion in rent protection demand” following the Bill’s passage. This trend mirrors broader concerns about policy changes affecting housing supply in the rental sector.
Insurance criteria impact
Rent guarantee insurers typically enforce strict eligibility requirements. Tenant referencing criteria commonly mandate confirmation of permanent employment, with zero-hours contracts excluded as a condition of cover. This creates a barrier for workers in flexible employment arrangements, who represent a growing segment of the UK workforce.
The tribunal decision highlights the potential conflict between landlords’ risk management strategies and access to housing for workers in non-traditional employment. As landlords adapt their business models in response to regulatory changes, the exclusion of zero-hours workers from insurance criteria could further constrain rental market accessibility.
The case raises questions about whether current insurance underwriting practices adequately reflect the realities of modern employment patterns, particularly as flexible working arrangements become more prevalent across various sectors of the economy.
