Landlords could see tenants moving in without paying rent

Landlords could see tenants moving in without paying rent

0:05 AM, 22nd January 2025, About 7 days ago 65

Text Size

Real estate firm Knight Frank has issued a stark warning that tenants could move into properties without paying any rent once the Renters’ Rights Bill becomes law.

The government’s bill will prohibit any rent payment before a tenancy agreement is signed, with landlords facing fines for accepting such payments.

The firm’s head of lettings, Gary Hall, said: “These amendments to the Renters’ Rights Bill are bad news for landlords.

“Under the amendments, any payment of rent made before a tenancy agreement is signed will be a prohibited payment.”

Landlord could be fined

Mr Hall continued: “If a landlord invites, encourages, or accepts such a payment, the landlord or their agent could face local authority enforcement action and a fine.

“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.

“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.”

Allow rent at the start of a tenancy

He added: “The Government 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.

“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.”

What the government says

The government’s guide to the Bill explains the ban on advance payments:

The Renters’ Rights Bill will end the practice of landlords demanding large amounts of rent in advance from tenants looking to secure a tenancy.

This unfair practice can encourage prospective tenants to stretch their finances to the limit, preventing them from moving within, or accessing the sector altogether.

Once enacted, the Renters’ Rights Bill will amend the Tenant Fees Act 2019 to prohibit landlords or letting agents from requiring or accepting any payment of rent in advance of the tenancy being entered into.

A landlord will only be able to require up to one month’s rent (or 28 days’ rent for tenancies with rental periods of less than one month) once a tenancy agreement has been signed and before commencement.

The Renters’ Rights Bill will also amend the Housing Act 1988 to provide that, once a tenancy starts, a landlord will be unable to enforce any terms in a tenancy agreement that require rent to be paid in advance of the agreed due date. 

This measure will protect prospective tenants from large requests for rent in advance that are beyond their means.


Share This Article


Comments

Nikki Palmer

Become a Member

If you login or become a member you can view this members profile, comments, posts and send them messages!

Sign Up

9:04 AM, 25th January 2025, About 4 days ago

Reply to the comment left by Geoff1975 at 25/01/2025 - 08:49
Why the need to have the DPS certificate signed? I've never heard of this before.

Deposits don't need to be registered before the start of the tenancy as you have 30 days to do that

Carchester

Become a Member

If you login or become a member you can view this members profile, comments, posts and send them messages!

Sign Up

9:11 AM, 25th January 2025, About 4 days ago

Reply to the comment left by Mark Chamberlain at 22/01/2025 - 09:36Now, that is a particularly useful point and needs development to make it into the Bill and then Act.
Carchester

Seething Landlord

Become a Member

If you login or become a member you can view this members profile, comments, posts and send them messages!

Sign Up

11:02 AM, 25th January 2025, About 4 days ago

Reply to the comment left by Geoff1975 at 25/01/2025 - 08:49
By the time the new rules come into force S21 will no longer be available anyway.

Michael Crofts

Become a Member

If you login or become a member you can view this members profile, comments, posts and send them messages!

Sign Up

11:40 AM, 25th January 2025, About 4 days ago

Knight Frank said: 'Under the amendments, any payment of rent made before a tenancy agreement is signed will be a prohibited payment'.
Well, yes, But that's only half the story.
The relevant amendments are here, search for NC13 and NC14: https://publications.parliament.uk/pa/bills/cbill/59-01/0127/amend/renters_rights_rm_rep_0108.pdf
The amendments envisage tenancy agreements being entered into (ie: signed and dated) before the the tenancy commences. The act of "entering into" creates a "permitted pre-tenancy period" which will end the day before the tenancy starts, during which the first month's rent can be paid. See clause 4B(2)(b) of amendment NC13. Tenancy agreements will probably have to contain specific provisions for this and a statement that if the first month's rent is not paid during the pre-tenancy period the tenancy shall not commence (and of course the keys won't be handed to the tenant). In practice I think what we will have to do is agree the terms of the tenancy with the tenant, sign and date the tenancy agreements, and then receive the deposit and first month's rent no later than the day before the tenancy starts. If a tenant demands the keys without having first paid the first month's rent the answer will be: 'You can't have them because the tenancy has never commenced. You've got an agreement but it has been nullified by your breach of the obligation to pay the first month's rent during the permitted pre-tenancy period.'
While I'm here, does anyone understand the construction of 4B(12), specifically the reference to "paragraph". I think the usual rules of interpretation would mean that the definitions in 4B(12), including the definition of “permitted pre-tenancy period” apply only to 4B(12) itself, which is nonsensical. The word "paragraph" ought to be "Section". And there's at least one typo, there's a missing bracket here: '(4) In a case where the terms of the tenancy (after taking account of section
4A)'

DP

Become a Member

If you login or become a member you can view this members profile, comments, posts and send them messages!

Sign Up

11:46 AM, 25th January 2025, About 4 days ago

Reply to the comment left by Paddy O'Dawes at 22/01/2025 - 07:12
only way to avoid potential trouble would be to take cash at the time of signing the contract (inconvenient to both tenant and landlord) or carry a card machine, crazy! its only a couple of days before the contract is due to start normally not weeks or months, so just a timing thing and gets it all in place and out of the way before check in otherwise how will the landlord know if they intend paying once you've signed.

DP

Become a Member

If you login or become a member you can view this members profile, comments, posts and send them messages!

Sign Up

11:54 AM, 25th January 2025, About 4 days ago

Reply to the comment left by Guy Malone at 22/01/2025 - 08:22
because you don't have the company or debtor you supplied to occupying your services so you can't supply them to any one else and then have to apply to the courts and all that to regain them for maybe up to a year.

Kate Mellor

Become a Member

If you login or become a member you can view this members profile, comments, posts and send them messages!

Sign Up

11:57 AM, 25th January 2025, About 4 days ago

Reply to the comment left by AnthonyG at 22/01/2025 - 14:46I suspect that the reason for potentially banning landlords from accepting say 6 months rent in advance, is that they’re trying to level the playing field for tenants as much as possible to prevent those with money getting an advantage by offering rent in advance. It’s a complete nonsense of course.

DP

Become a Member

If you login or become a member you can view this members profile, comments, posts and send them messages!

Sign Up

12:05 PM, 25th January 2025, About 3 days ago

Reply to the comment left by MPD at 22/01/2025 - 10:00
because we are now to become the waiters and waitresses on the banquet of supplying housing for the government who intend to minimise or strip away our powers ie control by legislative means and not a tip in sight.`Maybe we should complain to the Court of Human Rights.

Kate Mellor

Become a Member

If you login or become a member you can view this members profile, comments, posts and send them messages!

Sign Up

12:43 PM, 25th January 2025, About 3 days ago

I send all my documentation by Adobe Sign as soon as the referencing is successfully completed. I don’t need to physically see the tenants to have the ast signed, so this particular change won’t impact my business fortunately. I highly recommend getting your documentation moved online. Adobe is a product that pays for itself for me. It’s very convenient, and secure; and you then have everything available in digital form, accessible from anywhere via the cloud. I don’t keep paper files for my tenancies anymore. I use Adobe Sign for my inventories as well, and everything that needs to be provided goes out by Adobe Sign and is signed by the tenant directly on their phone which gives me full proof of receipt and a solid audit trail of everything that’s been provided. Even if the tenant doesn’t sign something it records the date and time the tenant views the document, which can be very useful.
I know I’ve gone somewhat off-topic. It’s just that I’m surprised so many landlords are still doing all their signing up on paper, on the commencement date.

Slooky

Become a Member

If you login or become a member you can view this members profile, comments, posts and send them messages!

Sign Up

13:10 PM, 25th January 2025, About 3 days ago

Reply to the comment left by Kate Mellor at 25/01/2025 - 12:43
How much is it. I thought it was expensive. Then does it means the tenant has to pay for some kind of software to digitally sign???

Leave Comments

In order to post comments you will need to Sign In or Sign Up for a FREE Membership

or

Don't have an account? Sign Up

Landlord Automated Assistant Read More