Landlords to be banned from asking for greater than a month’s hire upfront from tenants underneath new legislation – and so they’ll face £5,000 fines in the event that they encourage ‘de facto bidding wars’

Landlords will be banned from demanding more than a month’s rent in advance from tenants under new laws.

Changes to Labour’s Renters’ Rights Bill will prevent landlords or letting agencies from encouraging ‘de facto bidding wars’ between prospective renters.

Housing minister Matthew Pennycook told MPs, in some parts of the country, that tenants were being asked to offer six, nine or even 12 months’ of rent in advance.

This left them having to choose between ‘stretching their finances to breaking point’ or walking away from a property to ‘potentially risk homelessness‘, he said.

Mr Pennycook warned landlords and letting agencies they will face fines of up to £5,000 if they ‘set tenants against each other’ by asking for huge up-front payments.

He announced that further changes to the Bill being made by the Government would see extra protection for tenants from ‘unreasonable requests’ for early rent payments.

The minister spoke in the House of Commons as MPs began their consideration of the remaining stages of the Bill.

Angela Rayner, the Housing Secretary and Deputy Prime Minister, has hit out at ‘outrageous upfront costs’ being demanded by landlords from new tenants.

But landlord groups have warned that capping advance rent payments at one month’s rent could leave property owners at risk if tenants have no other way of proving their ability to pay rent on an ongoing basis.

Landlords will be banned from demanding more than a month’s rent in advance from tenants under new laws

Angela Rayner, the Housing Secretary and Deputy Prime Minister, has hit out at ‘outrageous upfront costs’ being demanded by landlords from new tenants

Housing minister Matthew Pennycook told MPs, in some parts of the country, that tenants were being asked to offer six, nine or even 12 months’ of rent in advance

The groups, including the National Residential Landlords Association, British Property Federation and Propertymark, said the Government’s proposed changes ‘risk making access to rented housing harder for the very people we want to support’.

But the Ministry of Housing, Communities and Local Government said landlords would still be able to require a security deposit of up to six weeks’ rent, giving them the confidence tenants can sustain their tenancy agreements.

Mr Pennycook told MPs this afternoon: ‘This Government has long recognised that demands for extortionate amounts of rent in advance put undue financial strain on tenants and can exclude certain groups from renting altogether.

‘The typical story is all too familiar – tenants find and view a property that as advertised matches their budget.

‘Only to find that, on application, they’re suddenly asked to pay several months’ rent up front to secure it. Tenants in such circumstances almost always confront an impossible choice.

‘Do they find a way to make a large rent in advance payment, thereby potentially stretching their finances to breaking point? Or do they walk away and potentially risk homelessness if they are unable to find an alternative?’

Homeseekers were being ‘encouraged to offer ever larger sums up front to outdo the competition and secure a home that may or may not be of a good standard, or risk being locked out of renting altogether’, the minister added.

Mr Pennycook said the Government’s changes to the Bill would ‘prevent unscrupulous landlords from using rent in advance to either set tenants against each other in de facto bidding wars, or exclude altogether certain types of renters who are otherwise perfectly able to afford the monthly rent on a property’.

The minister said further amendments to the Bill would see tenants ‘continue to be protected from unreasonable requests for rent to be paid early, once a tenancy has commenced’.

‘The effect of these amendments would be that tenants can be certain the financial outlay to secure a tenancy will not exceed the cost of a tenancy deposit and the first month’s rent,’ he told MPs.

‘And they will not be required to pay their rent earlier than agreed. It would thereby reduce the barriers that stop tenants moving from substandard or insecure housing.’

Alex Sobel, Labour MP for Leeds Central and Headingley, thanks Mr Pennycook and Ms Rayner for the Government’s changes to the Bill, after he previously tabled his own amendment on capping rents in advance.

‘The day we have been waiting for has come,’ he posted on social media.

Later in the Commons debate on the Bill, former Labour leader Jeremy Corbyn claimed some landlords are pre-emptively putting up rents by 20 per cent in anticipation of the new laws.

The now-independent MP for Islington North asked Mr Pennycook if he would introduce protections in the meantime to stop tenants being subject to well-above inflation rises.

Mr Corbyn said rent levels were going up by ’10 per cent, 15 per cent, sometimes 20 per cent’.

He added: ‘Long-term, private sector tenants are at threat because the landlord knows this Bill is coming, and knows that there’s going to be greater restrictions.

‘Maybe there should be more restrictions, but greater restrictions on them in the future to raise rents and certainly no-fault evictions and are trying to evict large numbers of tenants at the present time.

‘I am meeting many constituents who are going through incredible levels of stress about this at the present time.

‘I realise this Bill is not yet law, it’s got to go through the House of Lords, I’m not quite clear what date the Bill is going to finally be enacted, I just hope it’s soon.

‘I would urge the minister to consider any kind of urgent action and advice he can give to protect existing tenants in the run-up to the introduction of this particular piece of legislation.’