The Renters’ Rights Act introduces major changes to how rent can be collected — removing a long-standing option that many landlords and agents have historically relied upon to manage risk.
For some landlords, this may prove to be one of the more commercially significant changes within the new legislation.
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One month in advance — and no more
Under the new rules, landlords will no longer be permitted to accept more than one month’s rent in advance.
This means:
* No 3, 6, or 12-month upfront payments
* No quarterly, biannual, or annual payment arrangements
* All tenancies must operate on monthly payment terms only
Importantly, this restriction applies even where a tenant voluntarily offers to pay multiple months upfront.
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Who is most affected?
While the intention behind the change is to create greater consistency and affordability, it also removes a practical solution that has historically helped some tenants secure accommodation.
In particular, the changes may disproportionately affect:
* Tenants with adverse credit history, such as CCJs
* International tenants without an established UK credit profile
* Self-employed applicants with less traditional income structures
In many cases, paying several months’ rent upfront has been a legitimate way for these tenants to demonstrate financial commitment and offset perceived risk for landlords.
Without that option, some prospective tenants may now find it more difficult to pass affordability or referencing criteria.
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Changes to rent collection timing
There is another important change landlords need to be aware of.
Under the new framework, rent must not be requested or paid until the tenancy agreement has been formally executed.
Historically, contract law principles were relied upon, whereby the tenancy only became fully binding once all essential contractual elements were in place — including consideration (usually the payment of the first month’s rent).
Under the new structure, there is now the potential situation where:
* The tenancy agreement has been executed
* The tenant requests the keys
* But the balancing rent or deposit payment has not yet been made
In those circumstances, landlords will still be legally required to hand over possession of the property.
In reality, the vast majority of tenants will act entirely properly and pay without issue. However, the loophole does create additional exposure where rogue tenants choose to take advantage of the process.
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Why this matters
These changes introduce additional uncertainty and financial risk at the start of a tenancy.
Without the option of collecting rent upfront:
* Landlords will need to place greater reliance on referencing and affordability checks
* Some tenant groups may struggle to secure accommodation
* There is reduced financial security at the commencement of the tenancy
* Cash flow risks may increase where tenants default early on
This is another example of the sector shifting towards stronger systems, tighter processes, and more evidence-based tenancy management.
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Our advice
To adapt successfully under the new framework, landlords should:
* Review and strengthen referencing and affordability procedures
* Ensure all rent collection processes comply with the new legislation
* Strongly consider Rent Guarantee Protection products to reduce exposure to arrears and possession delays
The landlords who adapt best over the coming years are likely to be those who operate with clear and professional systems, robust processes, and a proactive approach to risk management.
If you are considering placing your properties with a professional and knowledgeable letting agent, and would like to learn more about our tenancy management services or Rent Guarantee Protection options, book a scheduled call with us – our team would be delighted to help.
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In the next instalment of our Renters’ Rights Act Tips Series, we’ll continue exploring the key legislative changes and what they mean in practical terms for landlords.