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8th January 2025
12:26pm GMT
Labour is set to ban landlords from charging more than a month's rent upfront as part of planned rent reforms.
The government has said it will ban the practice as part of its new Renters' Rights Bill. As part of the bill, landlords will also only be allowed to raise rents once a year and to the market rate.
Housing minister Matthew Pennycook said in parliament on Tuesday that "demands for extortionate rent in advance" can exclude certain groups from renting altogether.
According to Shelter, more than 800,000 private renters have been unable to rent a home in the last five years because they couldn't afford advanced payments.
Responding to the incoming ban, Tom Darling, Director of the Renters’ Reform Coalition, said: “For too long, extortionate rent in advance demands have allowed landlords to discriminate against poorer renters.
"It’s great the government have acted on this and listened to renter groups by setting out clearly that this practice will be prohibited."
However, critics have warned the practice of charging big sums upfront can act as a form of insurance for landlords when tenants cannot pass credit checks.
They argue that outlawing the practice will give landlords less protection against potentially risky tenants, and make it more difficult for tenants with poor credit scores to secure a house.
Julie Ford, director of landlord support service Gothard Rowe, told the Telegraph: “Getting rid of rent advance payments will discriminate against a lot of people, such as those with bad credit but who have savings and can pay rent upfront.
“It will also discriminate against overseas people who won’t be able to pass our credit system. If you’re not allowing rent to be paid upfront to show goodwill, you’re actually shutting the door on an awful lot of people."
She said the ban was a "double-edged sword" because landlords will "just be a lot more picky."
Labour's Renters' Rights Bill is replacing the Tories' Renters' Reform Bill, which never made it through parliament before last year's election.
Just like the proposed bill of the previous government, Labour plan to ban "no-fault" evictions in the bill. They will also replace all fixed tenancies with rolling tenancies and ban in-tenancy rent increases once the bill is enacted next summer
Housing secretary Angela Rayner said: “There can be no more dither and delay. We must overhaul renting and rebalance the relationship between tenant and landlord.
“Renters have been let down for too long and too many are stuck in disgraceful conditions, powerless to act because of the threat of a retaliatory eviction hanging over them.”
The Renters' Right Bill will also include a ban on rental bidding wars, and will make it a legal requirement for landlords and letting agents to publish an “asking rent” for their property.
Ahead of the general election, Keir Starmer said in a Question Time debate that he wanted to stop landlords "ripping tenants off" by encouraging them to offer to pay higher rent to secure a property.
He said this practice was "driving rents through the roof and it's not fair on people."
