Number of landlords asking for six months rent in advance is rising, claims BBC
A Radio 5 podcast claims that growing numbers of landlords are asking tenants with a lack of renting history or poor credit score to stump up six months’ rent in advance, exacerbated by the climate of Covid-hit incomes.
While the Tenant Fees Act bans most letting fees and caps tenancy deposits paid by tenants, there is no legal limit on advance rent payments.
OpenRent says that of the 1750,000 properties it let last year, in 95% of cases, tenants had to provide one month’s rent upfront but of the 9,000 cases where more than one month was required, nearly a quarter asked for six months.
Company director Jonathan Ward told the Wake up to Money programme that he had been in a new job for just five weeks when he booked a viewing of a flat in Bradford and was asked if he would be willing to pay six months’ rent upfront – £5,000 plus a deposit – when he couldn’t provide a guarantor.
The National Residential Landlords Association advises against big upfront payments and told the BBC: “We would encourage landlords to look for alternatives to asking for high levels of rent upfront.
“Where necessary, it is usually simpler to obtain a guarantor or suitable insurance product to provide assurance to tenants and landlords that rents will be covered.”
A spokesperson for the Ministry of Housing, Communities and Local Government said that it did not expect landlords to ask for multiple months in advance.
Arrears and voids
Housing Hand, the UK’s largest guarantor service, tells LandlordZONE that the pandemic and other economic factors have led to landlords feeling uncomfortable and worried about arrears and voids.
James Maguire, head of sales and business development, says: “Tenants are also concerned about their position in these challenging times. I would suggest that post-Covid referencing is reporting more ‘amber’ results (tenants needing a guarantor) due to financial positions being affected by Covid.
“In the same scenario, students find their parents are unable to pass referencing so our service is the answer, as the only alternative is to pay six or 12 months’ rent in advance.”