Rent in Advance Restrictions: What Payments Can Landlords Legally Request?

A prospective tenant has just viewed your property in Birmingham. They like it, but they are self-employed, or newly arrived in the UK, or a student without a credit history, and they offer to pay six months of rent upfront to settle your nerves. A few years ago, many landlords would have said yes without a second thought. Today, that single conversation could expose you to a civil penalty.

Since 1 May 2026, the Renters’ Rights Act 2025 has tightened the rules on rent in advance for new tenancies in England. Alongside the Tenant Fees Act 2019, it now sets a clear limit on what money a landlord or letting agent can ask for, when they can ask for it, and what they must do with it. The short answer to the question in the title is this: a landlord can legally request a holding deposit of up to one week’s rent, a tenancy deposit of up to five weeks’ rent (six weeks where the annual rent is £50,000 or more), and up to one month’s rent in advance, and that rent can only be requested after the tenancy agreement has been signed. Almost everything else a tenant might previously have been charged is prohibited.

This guide explains each permitted payment, the timing rules that catch landlords out, what the penalties look like, and what to do instead when a tenant’s finances look uncertain. It is written for landlords across Birmingham and the rest of England. It gives general information and is not legal advice, so take advice on your own situation if you are unsure.

The Core Rules in Plain English

There are really two layers of law at work here. The Tenant Fees Act 2019 has limited what landlords and agents can charge tenants in England since June 2019. It works on a simple principle: if a payment is not on the list of permitted payments, you cannot require it. The Renters’ Rights Act then amended that framework from 1 May 2026 so that the rules on rent in advance are tighter than before.

The practical effect is that three things are now fixed. First, you cannot ask for, encourage or accept any rent before the tenancy agreement has been signed. Second, once it has been signed, you can require no more than one month’s rent before the tenancy starts, or 28 days’ rent where rent is paid more often than monthly. Third, once the tenancy is under way, you cannot require rent to be paid before its due date, and new assured periodic tenancies have rent periods of no more than a month, so a clause demanding several months at once has no legal effect.

Tenancy deposits and holding deposits sit outside the rent in advance rules, and they have their own caps. That distinction is important, because many landlords assume that a bigger deposit can make up for the lost ability to take rent upfront. It cannot, because the deposit cap has not changed.

What a Landlord Can Legally Ask For

The Tenant Fees Act permits only a short list of payments. Understanding that list is the easiest way to check whether any request you are about to make is lawful.

Anything outside that list is a prohibited payment. Typical examples include administration fees, referencing and credit check fees, inventory charges, check-out fees, professional cleaning charges and renewal fees. These cannot be recovered from the tenant, whether they are called a deposit, a charge or a contribution.

Rent in Advance: When and How Much

The rent in advance rules are where most of the confusion lies, so it is worth walking through the timeline in the order a letting happens.

The most common mistake is taking money too early. A tenant may be keen to secure a property and transfer a month’s rent a week before signing, and a landlord who accepts it may think they are simply being helpful. In fact, accepting rent before the agreement is signed can be a prohibited payment, and the council can investigate it. If it happens by accident, the safest course is to return the money and take it again after signing.

The second common mistake concerns size. Where tenants have thin credit files, landlords have often asked for three, six or twelve months upfront to offset the perceived risk. That is no longer allowed as a requirement. A tenancy clause demanding it is unenforceable, and making a tenancy conditional on a larger payment is a breach of the Act.

What about a tenant who offers more? The position here needs care. Government guidance confirms that tenants remain free to pay rent before it is due where they choose to, but the restriction on landlords is on requiring, inviting or encouraging an advance payment in the pre-tenancy period, and Shelter’s guidance on the Act states that a landlord cannot even accept a tenant’s offer to pay more rent in advance. Reading those together, the safest approach is simple: never invite a larger payment, never make it a condition of the tenancy, and decline any offer of a lump sum before the tenancy starts. If a tenant who is already living in your property later chooses to pay early, record clearly that it was their own decision and that you did not ask for it.

The restriction also reaches payments made by others. A guarantor or family member paying several months of rent on the tenant’s behalf before the agreement is signed falls squarely within the anti-avoidance provisions, so the same rules apply to them.

Holding Deposits: Reserving a Property Lawfully

A holding deposit is the one payment a landlord can lawfully take before the tenancy agreement is signed. It exists so that a tenant can show they are serious while you carry out references and checks. It is capped at one week’s rent, calculated as the annual rent divided by 52, and the cap applies per tenancy, not per tenant. If three sharers are on the same agreement, they pay one week’s rent between them.

Several conditions apply. Once you have taken a holding deposit, you cannot accept another from a different applicant for the same property while the first is still held. You and the tenant should agree a deadline for entering into the tenancy, and if nothing else is agreed, that deadline is 15 days. If the tenancy goes ahead, the holding deposit is typically put towards the first month’s rent or the tenancy deposit. If it does not, you must refund it within seven days of the deadline passing or of you deciding not to proceed.

There are limited circumstances in which a landlord can keep a holding deposit, such as where the tenant gives false or misleading information, fails a right to rent check, withdraws from the agreement or fails to take reasonable steps to complete it. Even then, you should give the tenant a written explanation. A landlord who withholds a holding deposit without a lawful reason has taken a prohibited payment.

Tenancy Deposits: The Cap Has Not Changed

The Renters’ Rights Act did not alter the deposit cap. A tenancy deposit remains limited to five weeks’ rent where the annual rent is below £50,000, and six weeks’ rent where it is £50,000 or more. Anything above that is a prohibited payment, and the excess has to be returned.

The deposit must also be protected. If you take a deposit for an assured tenancy, you must place it in a government-approved tenancy deposit scheme within 30 days of receiving it, and give the tenant the prescribed information about where it is held and how to get it back. Unprotected deposits cause problems at every stage, from penalties to disputes at the end of the tenancy. If a disagreement over deductions arises later, our guide to handling deposit disputes step by step explains how the process works.

It is also worth remembering what a deposit is for. It secures damage or unpaid sums after the tenancy, and it is not a substitute for rent. A landlord who tries to treat a deposit as additional rent in advance, for example by asking for an inflated deposit and then applying it to the first months, risks breaching both sets of rules. The deposit cap and the rent in advance limit run side by side.

Other Charges You Can and Cannot Pass On

Beyond rent and deposits, the permitted list is short, and many everyday charges fall outside it.

You can recover the cost of utilities, council tax and communication services where the tenant is responsible for them under the agreement. You can charge reasonable costs for a lost key or security device, supported by evidence of what it actually cost to replace. You can charge interest on late rent, but only once rent has been overdue by 14 days or more, and only at a rate capped at 3% above the Bank of England base rate. And you can charge up to £50 (or your reasonable costs if higher, with evidence) where a tenant asks for a change to the agreement, such as swapping a sharer.

What you cannot do is charge for the ordinary work of letting a property. Referencing, preparing the tenancy agreement, arranging an inventory, check-in and check-out visits, renewal paperwork and end-of-tenancy cleaning are all costs of doing business, not payments a tenant can be asked to meet. Landlords who build these into “admin fees” or hide them within a larger deposit run into trouble, because enforcement authorities look at what a payment is for rather than what it is called.

Penalties for Getting It Wrong

Local authorities, including Birmingham City Council, enforce these rules, and the penalties are real. Breaches of the Renters’ Rights Act carry civil penalties of up to £7,000, rising to £40,000 for serious or repeated non-compliance. Government guidance specifically warns landlords that asking for rent in advance beyond the permitted amount can attract a fine of up to £7,000, and a repeat breach within five years can attract a higher penalty.

Prohibited payments under the Tenant Fees Act are enforced separately. A first breach can lead to a civil penalty of up to £5,000, and a further breach within five years can lead to a penalty of up to £30,000 or prosecution. A prohibited payment has to be repaid, and a tenant who has paid one can also seek to recover it.

There is also a practical cost beyond the fine. A landlord who has taken an unlawful payment and then tries to enforce the tenancy against a tenant will find their credibility damaged in any later dispute. If a possession claim ever reaches court, a record of compliance with the rules on fees and deposits is far more helpful than a history of questionable charges. Errors made at the start of a tenancy have a habit of resurfacing months later, when a landlord can least afford the distraction.

Rental Bidding and Advertised Rent

Rent in advance rules are closely linked to a second change that came into force on the same date. Landlords and agents must now state the rent when they advertise a property, and they cannot invite, encourage or accept offers above the advertised figure. A landlord who tells applicants that other bids have been received, or who hints that a higher offer would improve their chances, is likely to be in breach.

The two rules support each other. Before the changes, an applicant might offer both a higher rent and several months upfront in order to win a property. Now, neither is available as a competitive tool. The advertised rent is the rent, the first payment is capped, and applicants are meant to be assessed on suitability rather than on who is willing to pay the most. If you are reviewing what rent to advertise, our guide on how to set the right rent price for your property is not required reading for compliance, but it is worth setting the figure carefully because it is now the one you will have to stick to.

Managing Risk Without Rent in Advance

The change leaves many landlords asking a reasonable question. If I cannot take six months upfront from a tenant with no credit history, how do I protect myself? The answer is to deal with risk at the screening stage rather than at the payment stage.

Thorough referencing is the first tool. Employer references, bank statements, previous landlord references and a proper affordability check will tell you far more than an offer of cash. If you want a closer look at what to check and where applicants tend to cut corners, our article on best practices for screening potential tenants sets out a practical approach.

A UK-based guarantor is the second. A guarantor agrees to cover rent and other obligations if the tenant defaults, and a well-drafted agreement is the most widely used alternative for tenants who would otherwise have been asked for large sums in advance. Remember that the guarantor cannot be asked to pre-pay rent before signing, so the guarantee has to work as a promise rather than a deposit.

Rent guarantee insurance is the third option. Policies vary, and most require that the tenant has passed specific referencing standards, so check the terms before relying on one.

Finally, make full use of the permitted deposit. Taking the full five weeks, properly protected, gives you a recoverable buffer for damage or unpaid sums, and it sits within the law. What you cannot do is stretch it to compensate for the money you can no longer take as rent.

None of these options is perfect, and none removes the risk of arrears altogether. But they let you assess a tenant’s reliability on evidence rather than on how much cash they can hand over on day one.

A Realistic Example

Imagine a landlord in Birmingham with a one-bedroom flat advertised at £850 a month. A prospective tenant, a self-employed designer with only a year of trading history, applies and offers to pay six months upfront to strengthen the application.

The landlord politely declines, explaining that the law does not allow it. Instead, they take a holding deposit of one week’s rent, around £196, based on the annual rent of £10,200 divided by 52. They carry out references, ask for two years of accounts and agree that the tenant’s father, who owns his home, will act as guarantor. A deadline for agreement of 15 days is recorded in writing.

When the agreement is signed, the landlord asks for the first month’s rent of £850 and a deposit of five weeks’ rent, around £981. The deposit is protected in an approved scheme within 30 days and the tenant receives the prescribed information. The holding deposit is applied towards the first month’s rent.

At no point has the landlord asked for or accepted anything beyond what the law permits. If rent later falls behind, the guarantor is there as a backstop, the deposit is protected, and the paperwork is clean. That tidy start becomes valuable if a dispute ever arises.

What Happens If a Tenant Falls Behind

Compliance at the start of a tenancy does not remove the risk of arrears, and the new rules make early action more important, not less. Because landlords can no longer hold months of rent upfront, any shortfall becomes visible quickly, and the sooner you respond, the better your chances of resolving it.

Start with clear written communication as soon as a payment is missed. A formal rent arrears letter sets out the amount owed, the period it covers and what you expect next, and it creates a record that matters if the matter later reaches court. Our guide on how to handle late rent payments before it leads to eviction explains how to approach those early conversations constructively.

If arrears continue, the possession route depends on how much is owed. Under the current system, Ground 8, the mandatory ground, requires at least three months’ rent arrears at both the date of the notice and the hearing, with four weeks’ notice. Lesser arrears can be pursued under the discretionary grounds. And if a tenant has left owing money, debt collection support can help recover what is due through the proper channels.

The point is that good compliance and good arrears management go together. A landlord who has followed the rules on fees, deposits and advance rent is in a much stronger position at every later stage.

Common Mistakes to Avoid

The mistakes that cause problems in practice tend to be the same ones, and most are easy to prevent:

• Accepting rent or any other payment, apart from a holding deposit, before the agreement is signed
• Requiring more than one month’s rent before the tenancy starts, or including a clause that does
• Treating a voluntary offer of extra rent as an invitation to accept it
• Charging administration, referencing or inventory fees
• Taking a holding deposit above one week’s rent, or keeping it without a lawful reason
• Taking a deposit above the five or six week cap
• Failing to protect a deposit within 30 days or to provide the prescribed information
• Leaving old tenancy agreement templates unchanged after the law moved on

The last point is worth a specific check. Many landlords use templates that were drafted years ago and still contain clauses requiring multiple months’ rent in advance or listing charges that are now prohibited. Reviewing your documents now, rather than after a complaint, is the simplest protection you can give yourself.

Final Takeaway

The rules on rent in advance are now clearer than they have ever been, even if they are stricter than many landlords are used to. A landlord can ask for a holding deposit of up to one week’s rent before signing, and after signing can require up to one month’s rent and a protected deposit of no more than five weeks’ rent, or six where the annual rent is £50,000 or more. Rent cannot be taken before signing, larger lump sums cannot be demanded, and most other fees cannot be passed on at all.

The sensible response is to shift your risk management earlier. Screen thoroughly, use guarantors and insurance where appropriate, take the full deposit that the law allows, protect it on time, and keep a written record of every payment and the reason for it. That approach protects you from penalties and positions you well if a tenant later falls behind.

If a tenancy does go wrong, the quality of your paperwork and the speed of your response matter enormously. Assist A Landlord UK supports landlords across Birmingham and the rest of the country with arrears, notices and possession, and if you are looking for a Tenant removal service UK landlords can trust, the team can guide you through every stage, including serving a Section 8 notice correctly when arrears reach the point where formal action is needed. Get in touch today for clear, practical support that keeps your property and your position protected.