Recent changes introduced by the Renters’ Rights Act 2025 have placed strict limitations on landlords and agents regarding rent payments made in advance. This update explains why accepting rent in advance, particularly before a tenancy agreement is signed, is now prohibited and outlines the legal risks and penalties landlords face if they attempt to circumvent these rules. Understanding these regulations is essential for landlords and letting agents to ensure compliance and avoid significant fines.

Background: The Renters’ Rights Act 2025 and Tenant Fees Act Amendments

The Renters’ Rights Act 2025 (RRA) has introduced important amendments to the Tenant Fees Act (TFA), fundamentally changing how rent payments in advance can be handled for new assured periodic tenancies. The key objective is to protect tenants from unfair demands for rent payments before a tenancy begins and to prevent landlords or agents from imposing excessive or unauthorised advance payments.

Under the new regime, any rent payment made before both parties have signed the tenancy agreement—referred to as “pre-tenancy” rent—is now classified as a prohibited payment under the Tenant Fees Act. This means landlords and agents must not invite, encourage, or accept such payments from tenants, guarantors, or other relevant persons.

What Landlords Can and Cannot Accept

Landlords and agents are still permitted to take holding deposits and tenancy deposits, subject to the existing caps set out in the Tenant Fees Act. Additionally, “initial rent” can be collected but only within a limited “permitted pre-tenancy period” after the tenancy agreement has been signed. Any clause in a new tenancy agreement that requires rent to be paid in advance beyond these limits—for example, demanding more than one month’s rent upfront or rent before the start of a rental period—is unenforceable.

It is important to note that existing tenancies that were in place before the introduction of the RRA can continue with their current arrangements, such as six-monthly rent payments in advance.

Why Attempts to Circumvent the Rules Are Risky

Some landlords and agents have considered alternative methods to receive rent in advance, such as instructing tenants to pay a lump sum to a third party—like an agent or solicitor—who would hold the funds in escrow and release them monthly. However, the RRA includes explicit anti-avoidance provisions designed to prevent such indirect attempts to bypass the law.

The legislation clarifies that accepting rent payments via a third party before the tenancy agreement is signed, or in excess of the permitted amount or period, is treated as a prohibited pre-tenancy rent payment. This means that even if the money is held in escrow with instructions to release it gradually, it still constitutes a breach if it is effectively rent paid in advance outside the legal framework.

Furthermore, if a lump sum payment is not clearly identified as rent for specific periods, it risks being classified as a tenancy deposit. Holding more than five weeks’ rent as a deposit breaches the Tenant Fees Act and exposes landlords to further penalties.

Penalties and Enforcement

The government has introduced severe penalties to enforce these rules, reflecting a regulatory environment that is increasingly stringent towards landlords. Two penalty regimes apply:

• Tenant Fees Act penalties: A first breach involving prohibited pre-tenancy rent payments can attract a civil penalty of up to £5,000 from the local authority. Repeat breaches within five years can lead to fines up to £30,000 as an alternative to prosecution.
• Renters’ Rights Act enforcement: Local authorities can impose civil penalties up to £7,000 for minor or first-time non-compliance and up to £40,000 for serious or repeated breaches. In severe cases, criminal prosecution is possible with unlimited fines.

Additionally, tenants and local authorities may seek rent repayment orders if landlords fail to remedy breaches, such as not returning prohibited rent payments promptly. Local authorities now have a statutory duty to enforce landlord legislation and retain any fines collected, providing a strong incentive for active enforcement.

Implications for Landlords and Agents

Landlords and letting agents should avoid accepting rent payments in advance before a tenancy agreement is signed or beyond the permitted limits. Attempts to circumvent the law through escrow arrangements or third-party payments carry significant financial risks and legal consequences. Compliance with the RRA and Tenant Fees Act is essential to avoid costly penalties and maintain good landlord-tenant relationships.

For landlords seeking to manage rent payments effectively, it is advisable to adhere strictly to the permitted payment structures and consult up-to-date guidance from official sources such as the government’s Asking for Rent in Advance: Guidance for Local Authorities.

Looking Ahead: Support for Landlords

The Landlord Association (TLA) is launching a new Trusted Partners Hub in Q1 2026. This initiative will feature verified and approved service providers selected to support landlords, tenants, and property management businesses. Legal, trades, insurance, financial, mortgage, tenant screening, and other service providers are invited to register their interest to join the hub at https://landlordassociation.org.uk/become-a-tla-service-partner/.