Housing minister Matthew Pennycook confirmed the addition of a clause to stop landlords making upfront charges in the Commons on Tuesday.
MPs have voted for a new, one-month cap on advance rent payments in England as the Renters’ Rights Bill edges closer to becoming law.
Housing minister Matthew Pennycook confirmed the addition of a clause to stop landlords making upfront charges in the Commons on Tuesday.
Landlord groups have warned the move could leave property owners open to risk if tenants have no other way of proving their ability to pay rent on an ongoing basis.
And Independent MP Jeremy Corbyn warned some tenants were being evicted before the package of protections in the Bill, which includes a ban on “no-fault” evictions, can come into effect as expected this summer.
Setting out the details of the cap in the Commons, Pennycook said the government wanted to stop demands for “large rent-in-advance payments”, which he said could sometimes amount to 12 months of rent.
Tenants who were “perfectly able to afford the monthly rent” were being asked to give landlords “ever larger sums” in advance, he said, or “risk being locked out of renting altogether”.
The latest move comes on top of existing measures intended to stop bidding wars for homes where “often desperate tenants are pitted against each other so that landlords are able to extract the highest possible payment they can”..
Shadow housing minister David Simmonds said the bill had “many shortcomings” and would create “concerns around the availability, and the affordability of accommodation in the private rented sector”.
A coalition of groups representing landlords and letting agents claimed the cap on upfront payments could leave tenants unable to prove their ability to cover their rent.
The groups, including the National Residential Landlords Association (NRLA), said: “Cutting off any assurance landlords might seek when renting to those who cannot easily prove their ability to afford a tenancy is neither practical nor responsible.”
But some MPs, including Green Party co-leader Carla Denyer, called for the government to go further and introduce rent controls.
The Bristol West MP said the high cost of renting was leaving people “on the streets” so “rent controls are still needed – because having the right to something you cannot afford and cannot access is no help to anyone”.
Labour’s Bell Ribeiro-Addy, who is a renter and the MP for Clapham and Brixton Hill, said rent rises should be capped because “I’m yet to hear a compelling reason why landlords should see their incomes grow faster than people who actually work for a living”.
And former Labour leader Corbyn suggested evictions were happening before protections could be introduced, saying “there seems to be quite a lot of landlords at the present time who are using unreasonable arguments in order to terminate tenancies or raise rents ahead of this legislation coming in”.
Pennycook acknowledged there was “a lot of bad practice in the sector” that the government was keen to clamp down on, and acknowledged the potential for “retaliatory economic no-fault evictions” in the interim period.
However, he drew the line at rent controls, saying there was evidence the measure could harm tenants. “Once Section 21 [“no-fault”] evictions are done away with, unscrupulous landlords will no doubt attempt to evict tenants who assert their rights by means of extortionate rent rises,” he said.
However, he added, “the government sincerely believe that the introduction of rent controls in the private rented sector could harm tenants as well as landlords as a result of reduced supply, and discourage investment”.
Polly Neate, the chief executive of housing charity Shelter, welcomed the new cap on advance payments – but urged the government to go further on controlling rent rises.
She said: “For years, renters have been forced to magic up eye-watering sums up-front or see their hopes for a home vanish.
“With benefit recipients nearly twice as likely to be blocked from renting by demands for rent up-front, the government is absolutely right to use the Renters’ Rights Bill to rein this discriminatory practice in.
“To truly make renting more secure and affordable, the Bill must limit in-tenancy rent increases in line with either inflation or wage growth.”
The bill was supported by a majority of MPs at third reading and will now pass to the Lords.
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