The CEO of Foxtons, Guy Gittins, has cautioned Deputy Prime Minister Angela Rayner in a recent letter that a proposed ban on upfront rental payments may inadvertently disadvantage tenants, particularly those from low-income backgrounds.

In his correspondence, which was delivered last Tuesday, Gittins expressed his full support for the government’s intent to make the rental market more equitable for all. Since taking the helm at Foxtons, London’s largest letting agency, in 2022, he has emphasized the importance of a balanced approach to rental reforms.

The Labour Party has announced plans to overhaul private renting policies through their forthcoming Renters’ Rights Bill, anticipated to be implemented later this year. This legislation aims to enhance tenant rights by prohibiting “no-fault” evictions and eliminating upfront rental payments, which can often total thousands of pounds.

Gittins informed Rayner, who also serves as the housing secretary, that the proposed restriction on upfront rent collection could leave many renters in a disadvantageous situation. This is particularly true for those with inconsistent incomes, which often complicates their ability to meet affordability requirements.

According to Gittins, landlords typically require upfront rent payments from tenants who may struggle to satisfy conventional affordability criteria, including individuals with low or variable incomes, the self-employed, retirees, and foreign tenants who lack a guarantor. He referenced data from Foxtons indicating that roughly one in seven tenants barely fail their affordability assessments.

“The removal of upfront payments would significantly impact lower-income tenants, many of whom rely on savings or guarantors for securing housing,” Gittins stated. “These individuals would have no feasible alternatives, effectively barring them from the rental market altogether.”

Similarly, Ben Beadle, CEO of the National Residential Landlords Association, echoed these concerns in a recent article, asserting that for those lacking a strong credit history, paying rent in advance is often the sole option to secure a tenancy.

Landlords argue that requesting rent upfront is a measure to safeguard their interests when tenants cannot demonstrate their ability to afford the property. However, advocacy groups contend that this practice is frequently exploited.

“The demand for upfront rent is not a last resort; it has become a common practice, especially in competitive rental markets,” stated Tom Darling, director of the Renters’ Reform Coalition. He highlighted that landlords often leverage competitive bidding, placing tenants in situations where they feel compelled to outbid each other.

Labour has clarified that landlords would still be permitted to ask for one month’s rent upfront, along with a deposit that can be equivalent to six weeks’ rent.

If the Renters’ Rights Bill is enacted this year, a transition period of two to three months is expected for landlords, tenants, and letting agents to adapt to the new regulations. Gittins responded that such a timeframe would be “wholly inadequate,” arguing that the sector needs at least a six-month adjustment period.

“The letting market is multifaceted and diverse,” he noted. “Software adjustments and retraining for letting agents and property managers require substantial time.”

While housing is a significant priority for Labour, Gittins pointed out that the proposed Renters’ Rights Bill does not adequately address the core issue of the ongoing shortage of new housing developments.

“Instead, the proposed changes could lead to unforeseen challenges for lower-income tenants within the rental market,” he added.

A representative from the Ministry of Housing, Communities, and Local Government commented, stating: “Our Renters’ Rights Bill will eliminate tenants being exploited through exorbitant upfront costs that lead to financial strain or exclusion from housing entirely. We aim to fundamentally enhance the rights of 11 million private tenants by eradicating rental bidding wars and abolishing no-fault evictions to create a fairer system with greater stability for renters.”