A new report by the Deposit Protection Service (DPS) has revealed that 6 in 10 new tenants paid up to three months’ rent up front in the past year.
Of the 2,210 tenants surveyed by the DPS, another 8% paid 4 to 6 months’ rent, while 5% paid for 9 to 12 months in advance.
The survey further shows that paying rent up front is just one of the things that applicants do to stand out. Almost a quarter (23%) provide evidence of their income, 16% share references from their employer, and 15% share a reference from a previous landlord.
Landlords can afford to be choosy at the moment. While demand is down compared to the pandemic, Zoopla’s latest rental market report showed that the average rental property gets more than 20 enquiries from tenants. Lettings sector figures also expect landlords to get more risk-averse once the Renters’ Rights Bill makes it more difficult to evict tenants.
Paying rent up front gives the landlord more protection from arrears later, and can also be offered instead of a guarantor – which is itself a way of protecting the landlord from risk.
What is the future of up-front rent?
If the Renters’ Rights Bill proceeds as planned, there will be a cap on how much rent landlords can ask for up front – but the government hasn’t yet said how much that will be, and tenant groups are lobbying to have the practice banned entirely.
The government also wants to end bidding wars between tenants by banning landlords from taking more rent than the listing price.
That could help new tenants avoid a large bill at the start of their tenancy. Finding multiple months’ worth of rent, on top of a deposit and any moving costs, can be a challenge.
But it also means that desperate (albeit financially secure) tenants will have fewer creative ways to secure an advantage over other applicants in an increasingly competitive rental environment as more landlords leave the market. For example, the DPS survey found that only 2% of applicants provided pictures of their current living space to show that they are keeping it in good condition, but this could become more common.
Rent guarantors could also become more common as one of the few ways in which landlords can still protect themselves from non-paying tenants – meaning that those without high-earning, home-owning relatives could find it extremely difficult to rent.
Other tenant headlines
Older tenants “afraid to rock the boat with landlords” – claim – Landlord Today
Renters are the real villains of the rental crisis – they’re worse than landlords – The Telegraph
