Knight Frank’s Head of Lettings, Gary Hall, has voiced concerns has voiced concerns that the new rules to be brought in by the Rights Bill  could complicate matters for both landlords and tenants.

He explained: “The big problem with this is often tenants want to move into a rental property quickly – sometimes in a matter of days – and transfer of funds can take three to five days, sometimes more if coming from overseas.”

Under the proposed framework, landlords and agents could face enforcement action and fines if they invite, encourage, or accept rent payments before a tenancy agreement is signed. Hall believes this approach fails to account for practicalities:

“Tenants will want to be able to make one payment covering rent and deposit as soon as possible to avoid multiple bank charges or the admin of making multiple payments. Labour needs to see sense and allow rent at the start of a tenancy to be paid before a tenancy agreement is signed and before the start date of the tenancy.”

He added, “The current framework puts landlords and agents at constant risk of enforcement action for something that is out of their control. It is also unfair for a landlord to be at risk of a tenant moving into a property without the first month’s rent paid.”

Key Challenges Highlighted

1. Prohibition on Upfront Rent Payments

Under the Bill, rent payments made before a tenancy agreement is signed would be classified as prohibited payments. This creates potential issues:

  • Delayed Tenancy Starts: Payments from tenants, especially those from overseas, can take several days to process. Restricting upfront payments could delay move-in dates.
  • Enforcement Risks: Landlords and agents face penalties if funds are received before agreements are signed, even if these actions are tenant-driven.
  • Administrative Burden: Tenants often prefer to make a single payment covering rent and deposit. The restriction could force multiple transactions, leading to higher costs and delays.

2. Restrictions on Advance Rent

The Bill limits landlords from requesting multiple months’ rent upfront, a common practice for:

  • Overseas Renters: Students or professionals relocating without local credit histories often use advance payments to secure accommodation.
  • Renters Failing Affordability Checks: Tenants with inconsistent income streams rely on this option to access housing.

Industry representatives warn that these restrictions could reduce housing options for renters who already face challenges in the market.

3. Market Implications

  • Housing Supply: Increased risks and reduced flexibility might discourage landlords from maintaining or expanding rental portfolios, exacerbating supply shortages.
  • Operational Uncertainty: Landlords and agents are left vulnerable to penalties for scenarios outside their control, such as processing delays or tenants’ payment preferences.

Proposed Adjustments to Address Concerns

1. Flexibility for Upfront Payments

Allow rent payments to be made before tenancy agreements are signed under specific conditions, such as:

  • Tenant-initiated requests.
  • Payments for long-term lets or properties with high demand.
  • Clear documentation to protect landlords and agents from enforcement risks.

2. Advance Rent Exemptions

Introduce exemptions for:

  • Overseas tenants without local credit histories.
  • Renters on fixed incomes or with non-traditional affordability profiles.
    These adjustments would ensure access to housing while safeguarding tenant protections.

3. Streamlined Compliance and Enforcement

  • Develop clearer guidelines for landlords and agents to manage payments without breaching regulations.
  • Introduce a grace period for processing initial payments before enforcement action is taken.

Balancing Tenant Protections and Market Practicalities

While the Renters’ Rights Bill has laudable goals of improving fairness and reducing financial burdens on tenants, its rigid approach could have unintended consequences. Striking a balance between tenant protection and operational feasibility is crucial to avoid:

  • Delayed tenancies.
  • Restricted housing options for vulnerable groups.
  • A potential decline in housing supply.