"This policy will ultimately harm the very individuals it aims to protect, particularly students, self-employed workers, and those without UK-based guarantors"
- Heidi Shackell - The Lettings Hub
The Lettings Hub has voiced significant concerns regarding the inclusion of New Clause 13 in the proposed Renters’ Rights Bill. The clause, which prohibits tenants from paying rent in advance, risks excluding many prospective tenants from securing rental accommodation.
Heidi Shackell, CEO of The Lettings Hub, emphasises the unintended consequences of this policy: “While we fully support the Government’s objective of protecting tenants and creating a fair rental market, banning rent in advance removes a vital option that many tenants rely on to secure housing. This policy will ultimately harm the very individuals it aims to protect, particularly students, self-employed workers, and those without UK-based guarantors.”
Last month, The Lettings Hub released initial insights showing that just 7% of tenancies begin with an upfront rental payment, with 15% of those tenants paying over £5,000 per month and 6% paying £1,000 or less.
Having completed further analysis of a sample of 30,000 tenants who paid rent in advance over the past three years, the data reveals that 28% of tenants paying rent in advance are students, with 72% moving from within the UK and 28% moving from overseas. 25% are full-time employed tenants, with 83% moving within the UK and 17% from overseas. 13% are self-employed, and 14% are unemployed. 8% of tenants paying in advance had a UK-based guarantor.
The data also highlighted that the highest volume of tenants paying rent in advance are relocating to London, followed by Manchester.
This data reinforces that rent in advance is not widespread, but it serves as a crucial tool for a minority of tenants to access the private rental sector. It also confirms that the percentage of tenants paying rent upfront is a trend that has remained stable over the past three years.
Proposed alternatives are inadequate
During the final reading of the bill on January 14, 2025, the Rt Hon Matthew Pennycook MP suggested that landlords could rely on guarantors, and landlord insurance as alternatives to rent in advance. However, The Lettings Hub highlights that the move to open-ended tenancies makes guarantors less willing to commit to indefinite financial liability. Many tenants, particularly those from low-income backgrounds or overseas, struggle to secure a UK-based guarantor.
In addition, most rent protection policies are unavailable for tenants who fail affordability checks, leaving landlords exposed to financial risk.
Removing rent in advance as an option will not make housing more accessible but will instead result in landlords rejecting tenants who fail affordability criteria, even if they can afford to pay upfront.
Tenant voices: Real-life impact
The Lettings Hub surveyed 500 tenants who had used rent in advance to secure a tenancy and found that 64% of tenants used their own savings to pay in advance and 81% confirmed that being unable to secure the rental property would have more than a minimal impact on them, with the majority saying it would have a significant impact.
Among the respondents:
- A student was unable to find a guarantor and used savings to secure accommodation.
- A young couple returning from travelling had no income at the time but secured a home by paying in advance.
- A self-employed entrepreneur unable to provide multiple years of tax returns used family support to cover upfront rent.
- A mature student who was unable to find a guarantor had four failed tenancy applications before he was given enough money from a family member to secure his student property.
- A retired couple used savings to rent a home, fearing they may have otherwise had to consider alternative housing such as hotels or temporary accommodation.
These examples illustrate how prohibiting rent in advance could force even more tenants into precarious situations, exacerbating housing insecurity rather than alleviating it.
Disproportionate impact on vulnerable tenants
Banning rent in advance will disproportionately harm tenants who already face significant barriers to securing housing, including individuals with poor credit histories, freelancers, gig workers, or self-employed individuals with irregular income and tenants unable to secure a UK-based guarantor.
Removing risk mitigation strategies like rent in advance payments means some groups of tenants will become unable to be let, with landlords declining to rent to the tenant based on risk assessment.
A call for reconsideration
The Lettings Hub urges the House of Lords to reconsider New Clause 13 in the Renters’ Rights Bill. Instead of an outright ban, the company advocates for consideration to be given to the regulation of rent in advance practices, ensuring tenant protection while preserving this critical pathway to housing.
