Landlords Encouraged to Seek Alternatives to High Rent Advance Demands

According to Radio 5 podcast Wake up to Money, increasing numbers of landlords are asking tenants with a poor credit score or lack of renting history to part with six months’ rent in advance. The situation has been made worse by the effects of the COVID-19 pandemic, with incomes hit hard by the resulting financial crisis and job cuts. But the NRLA advises against demanding such high advances, suggesting that an alternative guaranteed rent solution is sought.

Quarter of renters asked for six months’ rent in advance

According to OpenRent, of the 1,750,000 properties it rented out in 2020, in 95 per cent of cases, tenants had been asked to stump up one month’s rent in advance. However, of the 9,000 cases where more than a month was demanded, almost a quarter of those had requested six months’ rent.

The Tenant Fees Act puts a cap on deposits demanded by landlords, however there is no legal limit on advance rental payments.

One potential renter explained on the podcast that he had been in a job for just five weeks when he arranged to view a property in Bradford. He was asked at the time if he would be prepared to pay six months’ rent in advance, amounting to £5,000 PLUS a deposit, because he was unable to provide a guarantor.

Landlords advised to seek alternatives to high upfront rents

The National Residential Landlords Association advises against substantial upfront advances like this, telling 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 also stated that it did not expect landlords to ask for multiple months in advance.

In an interview with LandlordZONE, the UK’s largest guarantor service Housing Hand said that the COVID-19 pandemic, as well as other economic factors, have resulted in nervousness amongst landlords, with concern over void periods and rent arrears.

The company’s head of sales and business development, James Maguire, said that tenants also harbour concerns about their position during these challenging times. He suggests that post-COVID referencing is returning more ‘amber’ results, where tenants require a guarantor. This is due to financial positions being negatively affected by the pandemic situation.

Looking for a way to avoid rent arrears and void periods without demanding large advances? The homes2let guaranteed rent scheme holds the solution.

If you are looking for an alternative to requesting high rental advances, take a look at what homes2let has to offer.

Our council guaranteed rent scheme involves us letting your property to council tenants for a set period. So your rent is paid to us by the council, and we guarantee your payments for the term of the agreement, even if the property is untenanted. Payments are made in advance by standing order, without fail, every month.

With straightforward contracts, and delay-free turnarounds that could see you receive an offer of rent within 24 hours of us viewing your property, there is a lot to find reassurance with. You’ll never have to worry about tenant referencing either, as we cover that side of things too.

To learn more about how the homes2let guaranteed rent scheme works, we welcome you to get in touch.