Renters' Rights Act: The Advance Rent Cap Explained

What the Renters' Rights Act says about advance rent

Under the Renters' Rights Act 2025, landlords and letting agents are prohibited from requesting or accepting more than one month's rent in advance from a prospective tenant. This applies at the start of a tenancy and closes a loophole that some landlords previously used — asking for two, three, or even six months upfront — often as an informal way to offset perceived risk from applicants with limited credit history or irregular income.

The intention behind the restriction is straightforward: large upfront payments price many tenants out of properties they could otherwise afford on an ongoing basis. But the practical consequence is that landlords can no longer use advance rent as a financial buffer. That has prompted a shift in how many landlords and agents approach tenant selection — and not all of those responses are legally sound.

Why awareness gaps are a real risk

Research into the sector suggests a significant proportion of landlords and letting agents are not yet fully clear on the advance rent restriction — either unaware it exists, uncertain about its precise scope, or unclear on the penalties for breaching it. That matters because taking advance rent above the permitted amount is a prohibited payment under the Tenant Fees Act 2019 framework, and the Renters' Rights Act builds on that foundation. Penalties for prohibited payments can include fines and, in some cases, affect a landlord's ability to serve a valid notice to quit.

If you are managing properties through a letting agent, it is worth confirming explicitly that their standard application process has been updated. Agents acting on your behalf can expose you to liability even if you were not personally involved in taking the payment.

The unintended consequence: tougher screening

With advance rent no longer available as a safety net, many landlords have responded by raising the bar on tenant referencing. On the surface, that is a reasonable adjustment — thorough screening is good practice regardless. The concern is when tighter screening becomes a proxy for discrimination, or when landlords apply affordability thresholds so high that they effectively exclude tenants who would be perfectly capable of meeting their rent month to month.

Some specific things to watch:

• Income multiples: A common referencing benchmark is that a tenant's gross annual income should be 2.5 times the annual rent. That figure is not enshrined in law, but it is widely used. Pushing that threshold significantly higher without good reason can start to look like indirect discrimination against certain groups — for example, those on benefits, part-time workers, or people returning to work after a period of illness.
• Guarantors: Requiring a guarantor is lawful, but applying guarantor requirements selectively, or setting guarantor income thresholds that are disproportionate, can also raise discrimination concerns.
• Blanket policies: A flat policy of refusing any applicant who cannot meet an unusually high income multiple — without any case-by-case assessment — is the kind of approach that could draw scrutiny from the Property Ombudsman or a First-tier Tribunal.

The Equality Act 2010 continues to apply throughout the lettings process. Screening criteria that disproportionately affect people with a protected characteristic — disability, race, sex, religion, and others — need to be objectively justifiable.

What good screening looks like now

The removal of advance rent as a risk management tool does not leave landlords defenceless. It simply means the focus needs to shift toward genuine, evidenced assessment of a tenant's ability to pay over the course of the tenancy.

A robust referencing process should include:

• A full credit check through a recognised referencing agency
• Employment verification and, where relevant, an employer reference
• Bank statement review to confirm income and assess financial patterns
• A previous landlord reference where available
• For self-employed applicants, at least one year's accounts or an accountant's letter confirming income

For applicants on Universal Credit or Housing Benefit, it is worth understanding how Local Housing Allowance rates apply to your property and what direct payment arrangements are available. Many landlords who have let to benefit claimants report no greater arrears risk than with employed tenants — the key is setting up the right payment structures from the outset.

Deposits still provide meaningful protection

The Renters' Rights Act also maintains the five-week deposit cap introduced by the Tenant Fees Act. While you cannot top up your financial security through advance rent, a properly protected deposit — taken to the maximum permitted amount and registered with an approved scheme within 30 days — still gives you a meaningful route to recover unpaid rent or damage costs at the end of the tenancy.

Tenant City's deposit management tools enforce the five-week cap automatically and track protection scheme registration, so you can be confident you are compliant from day one of a new tenancy.

Staying on top of ongoing changes

The Renters' Rights Act made substantial changes to the private rented sector, and the advance rent cap is just one element. Landlords managing multiple properties across different tenancy start dates may find it difficult to keep track of which rules apply where, particularly as older tenancies transition to the new regime.

Tenant City's regulatory news feed provides a daily digest of UK housing law updates relevant to landlords, so changes like this do not catch you off guard. And if you need to draft a compliant tenancy agreement or accompanying correspondence, the AI Letter Drafter generates UK-law-aware documents that reflect current requirements — including the advance rent restriction.

The bottom line

The advance rent cap is now in place, and the compliance risk of ignoring it is real. The correct response is not to compensate by making tenant screening so onerous that it becomes discriminatory — it is to invest in proper referencing, use the deposit cap fully, and build tenant relationships based on clear, consistent criteria applied fairly to every applicant. That approach protects you legally and, in the long run, tends to result in better tenancies.