A leading lettings expert is arguing that Renters Rights Act policies about rent in advance of a tenancy starting may disadvantage some renters.
Allison Thompson of lettings agency Leaders says that previously there was no limit to how much rent tenants could pay up front to secure a property.
She says this was particularly helpful in certain circumstances, such as where tenants had sufficient money to pay the rent but struggled to pass affordability checks for some reason.
It was also considered helpful if a tenant wished to gain the edge over another applicant by offering the landlord a lump sum at the start of the tenancy.
Thompson says that while the Renters Rights Act attempts to help tenants by ensuring the application process is fairer, particularly for those less well-off, it actually means some tenants will find it harder to meet standard affordability checks.
This might include self-employed workers and those on zero-hours contracts, as well as tenants whose work is intermittent, such as actors and musicians.
She says: “It’s worth emphasising that these checks are important to ensure the rent is likely to be affordable for the tenant over the long term – particularly as landlords can no longer evict a non-paying tenant with just two months’ notice.
“Proof that affordability checks have been carried out is also necessary to satisfy landlord insurance requirements, particularly rent guarantee insurance.
“And, as a tenant, it’s important to remember that consistent rental income is what enables landlords to keep investing in maintaining and improving your home.”
She gives prospective renters this advice if they wish to reassure a new landlord that they can afford their property and there is little risk of falling into arrears.
1. Provide a guarantor. This is someone – usually a family member – who is prepared to co-sign your tenancy and take responsibility for paying the rent if you default. The landlord will carry out referencing and affordability checks on them, as they would any applicant. Having a guarantor is the most common option, as it provides the most reliable security for a landlord;
2. Provide evidence of capital. If you have savings or assets that can be easily liquidated, you can provide the landlord with bank statements or portfolio summaries. And if you have an accountant or financial adviser, it may be helpful if you can either allow the landlord to contact them or secure a letter from them confirming your finances;
3. Agree to make a lump-sum payment after the rental agreement is signed. While it is not legal for the landlord to accept rent in advance of the tenancy beginning, and they cannot demand more than one month’s rent up front, if you offer to voluntarily pay in advance once you’ve signed the rental contract, the landlord can accept it without breaching the Tenant Fees Act. Obviously, this is a greater risk for the landlord, as nothing can be confirmed until the tenancy is signed, but it’s certainly worth discussing;
4. Secure financial support through government benefits. Under the RRA, landlords are no longer allowed to discriminate against tenants in receipt of benefits, so if your income doesn’t meet the affordability requirements, it’s worth applying for Housing Benefit or Universal Credit.
And she adds: “Bear in mind that it may take a little longer to find a rental property, since landlords are more likely to choose a candidate who easily passes all affordability tests.
“From your perspective, too, it’s important to check that the rent isn’t going to be an uncomfortable financial stretch for you.”
