The way landlords manage financial risk at the start of a tenancy is changing.
Under the Renters’ Rights Act 2025, new restrictions on rent in advance will apply to assured periodic tenancies in the private rented sector in England from 1 May 2026. Relying on larger upfront payments is no longer an option. Instead, landlords need a more structured approach to assessing risk before a tenancy begins.
This shift does not remove control. It changes where that control sits, moving it from upfront payments to stronger checks, clearer safeguards and better planning.
To adapt effectively, it is important to understand both what has changed and how landlords can respond in practical terms.
Related: From Notice to Possession: Mullucks’ Step-by-Step Guide to Ending Tenancies after May 2026
What the new limits mean for landlords
Under the new framework, landlords and letting agents must not ask for or accept rent in advance before a tenancy agreement is signed.
Once the agreement is in place, rent in advance is limited to one month’s rent, or 28 days where the rental period is shorter. Larger required upfront payments, such as several months’ rent, are no longer permitted. While tenants may choose to pay more voluntarily, this cannot be required or encouraged.
Local councils enforce these rules and can issue civil penalties where, on the balance of probabilities, they conclude that a breach has occurred. As a result, landlords need to move away from relying on upfront payments and towards more reliable ways of managing risk.
Moving from upfront payments to upfront checks
Previously, higher upfront rent was sometimes used to offset uncertainty around a tenant’s financial position. With that option removed, the focus shifts to what can be properly assessed before the tenancy begins.
A stronger pre-tenancy process should include:
- Detailed affordability assessments
- Full referencing and credit checks
- Verification of income and employment
- Consideration of long-term stability
This approach allows landlords to identify potential risks early, rather than attempting to compensate for them later.
When a guarantor may be appropriate
Where additional reassurance is needed, a guarantor can provide a practical solution.
For applicants with limited credit history or variable income, a guarantor offers an added layer of security.
A guarantor agreement:
- Creates a legal obligation for a third party to cover rent if required
- Strengthens an otherwise acceptable application
- Should be clearly documented and explained
Guarantor arrangements must be applied consistently and fairly, with clear criteria in place.
Considering income protection and rent guarantee options
Alongside tenant checks and guarantors, landlords may also consider income protection products or rent guarantee schemes.
These can:
- Provide cover in the event of missed rent payments
- Support cash flow during unexpected issues
- Reduce reliance on upfront payments
While these options do not replace thorough referencing, they can form part of a broader risk management approach.
Strengthening affordability criteria
With fewer financial safeguards at the outset, affordability checks take on greater importance.
Landlords should ensure that:
- Income thresholds are realistic and consistently applied
- Evidence of income is verified rather than assumed
- Additional scrutiny is given where income is irregular
A clear affordability policy supports fair decisions and helps reduce the likelihood of future issues.
Keeping decisions consistent and documented
As with other areas of the Renters’ Rights Act 2025, consistency is essential.
Landlords should:
- Apply the same criteria to all applicants
- Keep clear records of affordability assessments and decisions
- Avoid making exceptions that cannot be clearly justified
Local councils may review decisions where concerns are raised, so having a well-documented process is essential.
Balancing risk and opportunity
The removal of large upfront payments may initially feel like a limitation. In practice, it encourages a more balanced and considered approach.
By combining:
- Thorough tenant checks
- Appropriate use of guarantors
- Consideration of protection products
landlords can build a more resilient and predictable rental strategy.
A more sustainable approach to lettings
The changes to rent in advance are designed to create a fairer system for tenants while encouraging more consistent decision-making from landlords.
Rather than relying on upfront payments, success now depends on selecting the right tenant and putting the right safeguards in place.
Support for landlords navigating the changes
Adapting to these changes does not have to be complex.
If you would like guidance on reviewing your affordability criteria, understanding guarantor options or exploring rent protection solutions, your local Mullucks branch can help you build a compliant and confident lettings strategy.
