Editor's note: This brief was summarised by The Property AI Team from a report by The Negotiator. Read the original article for full details.
Rent in Advance Ban Causing 'Huge Problems' for Many Tenants, Agencies Warn
Two leading national estate agencies have warned the Government that its recent ban on 'rent in advance' requests by landlords and letting agents is causing major problems for overseas and poorer tenants. Bosses at both LRG and Connells have made the comments independently to The Neg in recent days.
Both firms say that, although they applaud the overall thrust of the Renters' Rights Act (RRA), the ban on rent in advance payments is having the unintended consequences many within the property industry predicted it would.
Connells: Nurse Made Homeless
Helen Charlesworth, Chief Executive of Connells, says that prior to the RRA going live, if a tenant had a poor credit rating, the ability to pay rent in cash in advance to your landlord was a major boon for many less affluent tenants.
Charlesworth says she recently heard about how this practice being banned can affect ordinary hard-working renters with poor credit ratings on a personal level. She gives the example of a nurse working for the NHS who was served a Section 21 eviction notice prior to the Act going live because the landlord wanted the property back, and was therefore made homeless.
According to Charlesworth, the mum-of-three had previously paid her rent on time but, because she had a poor credit rating and wasn't able to pay any rent up-front instead – despite having 12 months' rent saved up – she couldn't get a mortgage or access another home within the private rented sector. She says the nurse is now homeless as a result of the Renters' Rights Act, adding that this needs looking at and that the firm is relaying these types of stories to its contacts in Government.
LRG: International Students Affected
Her comments are echoed by Allison Thompson, Chief Lettings Officer at LRG, who in a blog also published today says the ban has been a particular problem for international students, who used to be able to offer several months' rent in advance if they couldn't satisfy all the referencing criteria.
Thompson notes that with the loss of Section 21, many landlords are less willing to take a risk. However, she suggests this can be overcome by tenants offering guarantors, which has long been a common solution for students and other tenants who struggle to satisfy financial referencing checks.
Source: The Negotiator