The continuing Renters’ Rights Act nightmare – what happens if the first month’s rent isn’t paid?

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The continuing Renters’ Rights Act nightmare – what happens if the first month’s rent isn’t paid?

In a Property118 comment on 27 December, member “Spock” said:

“I have a student property. Traditionally, I have always asked for the rent payment for the first month a few days before the start of the tenancy start date. I never hand out keys until I know that everyone has paid the first month’s rent. If I can’t receive any rent before day 1, then if even one person hasn’t paid, then I can’t hand out any keys, which obviously creates problems. Have I read this correctly ? Am I unable to accept any rent before day 1?”

I’m guessing there may be other landlords wondering this. Here is my answer.

You don’t have to wait for the rent until Day 1, but you must not refuse to hand over the keys after the agreement has been signed. If you do, there is a real risk that you may have to pay fines (called “penalties”) of up to £40,000.

When both landlord and tenant have signed a tenancy agreement for a new Assured Tenancy, the tenancy is said to have been “entered into”. Usually, the agreement will be dated when the last person who is a party to the agreement has signed. If the commencement date of the tenancy is a later date then the time between the two dates is called the “permitted pre-tenancy period”.

You can accept rent in advance during (not before) the permitted pre-tenancy period, just as you have done in the past. This is limited to one month’s rent or 28 days rent if the rent payment period is less than a month. You can also accept payment of the agreed deposit up to the cap.

So far there is not really much if any, change to what you have been doing. But after the tenancy has been entered into you cannot refuse to hand over the keys even if the tenant never pays the first month’s rent, because that amounts to preventing occupation, which is equivalent to unlawful eviction or unlawful exclusion. That is an offence under the Protection from Eviction Act 1977 and now carries civil penalties of up to £40,000 under section 58 of the Renters’ Rights Act 2025 as an alternative to prosecution.

Make no mistake, refusing to hand over the keys is a serious offence.

If the tenant does not pay the first month’s rent and has moved in, then you can issue a notice under s.8 of the Housing Act 1988 specifying ground 10 and giving 4 weeks’ notice before you start court proceedings. But ground 10 is discretionary. The judge might refuse to grant an order for possession, or give the tenant time to pay, so that you would have to go back to the court again if the tenant never pays any rent.

Alternatively, you can wait until there are three months’ rent arrears and then give a four‑week section 8 notice specifying Ground 8 (serious rent arrears). You could also specify Ground 11 (persistent delay in paying rent). Note that there must be 3 months’ rent outstanding both on the date of the Section 8 notice and on the date of the hearing.

Tenants who understand this and want to game the system can, in practice, go a long time without paying rent.

Suppose the landlord and tenant meet on 1st May 2026 and both sign an agreement for a tenancy to start on 14th May. The landlord cannot ask for any rent until the agreement has been entered into. As soon as it is signed, the landlord asks for the first month’s rent, expecting the tenant to transfer the money there and then because that is what the agreement says they should do. The tenant says they will pay it on the day they move in. On 14th May, they meet at the property, and the landlord asks for the rent. The tenant says it will be paid the next day. The landlord cannot refuse to hand over the keys. They must give the keys to the tenant and let them move in.

The rent never arrives. The landlord gives 4 weeks’ notice specifying ground 10 expiring (say) 12th June and issues proceedings the next day. The court lists a hearing date of 10 August. The tenant has never paid any rent, but the court has discretion, and after hearing the tenant’s sad tale of woe, the judge grants 3 weeks to pay.

The tenant never pays. On 1 September, there are 3 months’ arrears outstanding, so rather than pursue the original claim, the landlord serves a new notice specifying ground 8 and on 30 September issues proceedings for a second time.

The hearing is on 25 November, and this time the court does grant an order for possession. The landlord pays to transfer the claim to the High Court for a writ of possession, and the bailiffs arrive at the property on 27 January 2027. The tenant has gone and has left the property in perhaps not quite as good a state as it was on 1 May 2026. The landlord has had no rent since the last tenant left, many months ago; meanwhile, they have been paying the mortgage, the insurance, and all the costs of the proceedings.

The tenant has lived rent-free for about 8 months.

All this was explained to the government during the committee stage of the Bill, but they ignored it.

Michael

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