Over 5 million households in the UK are currently living in privately rented accommodation, which is 20% of our population. This figure has doubled in the past ten years and as the cost of housing stock continues to outstrip wage growth, the number of people renting privately is unlikely to slow down in the foreseeable future. We are fast becoming a nation of tenants. Young professionals are the largest section of this market, often renting a property for the first time, having finished university or moved away from their hometown for work. Moving into a rental property can come with some unexpected costs, as well as the monthly rent, you will need to be able to cover the deposit, tenancy fees and all of the bills. This often makes the first month more expensive than anticipated. We’ve taken a look at the costs involved when becoming a tenant and give our advice.
With the introduction of the Tenant Fees Bill into Parliament earlier this year, a ban on Tenant Fees is looking ever more likely. However, we do not know when this bill will become law, so tenant fees are currently still in place and they vary. You will normally pay an admin fee to your estate agent when you have an offer on a property accepted. Fees often cover the cost of referencing, creating a contract, ID Verification, credit checks and inventory checks, so always check with your agent when viewing what the current fees are.
You will need to have a deposit ready (normally between a month and six weeks of rent) and this will then be held by your estate agent or landlord in a secured deposit scheme. Your deposit will be returned to you at the end of your tenancy, assuming the property is left in the same condition it was in when your tenancy began. If there are damages to the property, these costs may be deducted from your deposit. Similarly, you might be expected to pay for an end of tenancy professional clean when you move out if your landlord paid for one at the start of the tenancy, and this too could be deducted from your deposit.
Rental properties are either marketed as furnished or unfurnished. If you’re moving into an unfurnished property then you will need to furnish it yourself, and this can be expensive. Similarly, if you’re moving into a furnished property you will need to know exactly what’s included, particularly with electrical goods. Is there a microwave, toaster and kettle for example or would you need to purchase these? Is everything that is in the flat when you look round staying, always ask your viewing agent.
If you have not rented before and do not have a history with other landlords, proving that you are a reliable and desirable tenant, you may be asked to provide a guarantor. A guarantor is someone who would be willing (and legally obliged) to pay rent on your behalf, should you default on payments. This can also be requested by a landlord if you do not have enough of a work history or if you are freelance or self-employed.
Length of contract
Knowing the upfront costs of moving into a rental property can be high, it might be beneficial to consider the length of the contract and how long you’re likely to stay in a property. You might want a longer contract and you can always request that a break clause (a break clause is a clause in a contract that allows a person or party to end the contract early) is written into a longer contract giving you security and peace of mind.