The sensible tenant's complete guide to renting
For the first time since 1971 renting is the second most popular way to live, according to the Office for National Statistics English Housing Survey.
Owning a home still comes top but social housing has been pushed into third place.
Past assumptions that people rent because they can't afford to buy are outdating rapidly, as is the idea that paying a landlord rent is 'dead money' compared to paying a lender interest on a mortgage.
However, the true picture is more complex. Today, many more people rent because we have a more migrant population, student numbers have risen (despite fees) and property prices have fallen by up to 50% over recent years.
In addition our lives are changing. More people are divorcing and can't afford two mortgages. We change jobs more often and are becoming part of a 'global world'; many high flyers now rent hugely expensive properties in the UK and abroad as they move up the career ladder.
But whether renting a room or a palace, the rules are the same. When buying it's all about location, location, location; when renting it's all about checks, more checks and even more checks.
The key to success is to ensure you rent from a good landlord and letting agent. Despite the 'good' lettings guys' lobbying, successive governments have refused to regulate the industry in England. Not checking credentials could get you a rogue landlord or letting agent charging extortionate fees or who fails to register your deposit in one of the protection schemes – which is a legal requirement.
To rent a legally let property, it's vital to use companies and landlords that invest in training and know the most recent rules and regulations. Establishing whether a lettings agent has 'client money protection' is a quick way to distinguish good from bad.
Only agents with membership of the following organisations are likely to protect your rent so that it's insured and the landlord will be paid, even if the agent goes bust or someone steals the cash: The National Approved Letting Scheme (Nals); Royal Institution of Chartered Surveyors (Rics); Association of Residential Letting Agents (Arla).
If you're renting directly from a landlord, ideally make sure they are a member of a local authority landlord accreditation scheme. London, for example, has a voluntary code for landlords and agents called The London Rental Standard (london.gov.uk). In the West Midlands, look for the Midland Landlord Accreditation Scheme (mlas.org.uk).
Alternatively, confirm that a landlord is a member of, for instance, the Residential Landlord Association or National Landlords Association. If they 'can't remember' or can't tell you, it's not wise to risk renting from them.
As property rental grows in popularity, the good news is that more substantial landlords are coming into the market. Some are housing associations running mixed sites including properties for social tenants, part-buy/ part-rent and affordable rents (typically 80% of local market rent) or full market rent properties; for example, East Village in Stratford, on the former Olympics site (eastvillagelondon.co.uk) and Circle Living properties in areas like Coventry (circle.org.uk).
Remember that housing associations generally increase rent every year in line with inflation, potentially 4 to 5% annually. This is different to many private landlords who tend to increase rents in line with wages, which bizarrely can mean private landlords increase rents at a lower rate.
How you do recognise a reasonable rent?
It can be difficult to know what's reasonable to pay. Choosing a good landlord and/or letting agent's property in the first place means you'll have a better chance of paying a fair 'market rent'.
Recent talk has suggested rents have 'spiralled out of control' and 'risen more than wages'. That's certainly true in the social sector as rents rise in line with inflation, plus one or two points, despite stagnant wage levels. In contrast, continuing low mortgage interest rates have meant many private landlords, in the main, are maintaining reasonable rent levels.
In 2012/13, across England, average private rents were around £160 a week, according to the English Housing Survey's latest research. It also shows that on average, rents have increased by around 7% since 2008/9. Private rents, although on average higher than relatively stagnant wage levels, have increased by around 1% annually over the past decade, which is far less than house price growth and the social renting sector.
According to the Belvoir Lettings Index, current rents range from £570 per month in the East Midlands to £1,400 in London. In Scotland, the average rent between April and June was £583 per month, in England it was £735 per month and in Wales, £622 per month. Meanwhile, a joint survey from The University of Ulster, Property News and the Housing Executive puts Northern Ireland rents at an average of £534.
Of course, how much you pay will vary depending on the property's location, size and how well it's decorated.
What fees are fair for tenants to pay?
You probably won't want to pay any fees other than your rent, but a letting agent, in particular, must ensure that the property you view is let legally. This involves producing a legal agreement fair to both you and the landlord, and negotiating the terms of the let between you both. They effectively undertake the 'legals'' - making sure the property is fit for rent - on your and the landlord's behalf, so you don't need to pay for this independently.
They also verify that your financial information is accurate and that you can afford the property. For example, if you have a CCJ (county court judgement) against you, you must have a guarantor liable for any financial difficulties ahead.
Agents and landlords are legally obliged to visibly advertise their fees when you search, whether online, in their office windows or as a printed list. If they don't, report them to the Advertising Standards Authority. Here is a list of fees you'll typically have to pay. Avoid any agent charging higher fees.
- Administration fee £100 to £300
This is often a 'catch-all' fee charged for administrative work such as referencing and legal agreements. If you are paying this fee, there shouldn't be too many more additions unless you need a guarantor or have more than one or two people letting with you.
This is refundable if the agent or landlord withdraws from the transaction but not if you've been dishonest (for example, not mentioning CCJs).
Some agents and landlords charge an administration fee, plus a deposit and the first month's rent. Others will break down the fees as follows, or do a mix:
- Referencing (£30-£50)
This is for the agent or landlord to check you can afford the property.
- Legal fee (£200-£250)
This may not be charged but if you request changes to the contract, there is likely to be a fee.
- Inventory check-in or out
Expect to pay between £50 and several hundred pounds, depending on property size.
An inventory is a record of the property's condition when you move in and out. It helps prove that any damage incurred is normal wear and tear, or existed previously. Some agents and landlords pay for both the check-in and check-out, some split the bill to protect you both.
- The deposit (four to six weeks' rent)
This can be a tough one. It's usually the largest amount you'll pay but most deposits should be protected and fully refunded if you leave the property in acceptable condition. Deposits related to an Assured Shorthold Tenancy that started after 6 April 2007 must be protected with a government authorised scheme (in England and Wales, these are the Tenancy Deposit Scheme ( TDS), DPS and MyDeposits) by the landlord or agent within 30 days of getting it.
At the end of your tenancy, the landlord must return the deposit within 10 days of you both agreeing how much you'll get back. In the case of any disputes, the deposit remains protected until the issue is sorted out - and the TDS can act as a mediator.
To find out more about the schemes, visit gov.uk/tenancy-deposit-protection/overview and if you are not sure where your deposit is held currently or in the future, visit housing charity Shelter's checking scheme at england.shelter.org.uk.
There are other things to look out for when choosing a rental property. These are:
Bills: When renting, you may have to pay, in addition to your rent, council tax, a TV licence, landline and broadband and utility bills. During viewings, it's sensible to check the Energy Performance Certificate so you know what the utility bills will be. Remember, a viewing on a summer's day may not indicate that the property's freezing in winter. Ideally, a property will have a 'D' rating or above.
Damp: Check in corners of rooms for damp or mould which, if it exists, is an indication of poor maintenance.
Furniture: Establish whether the property is furnished, and whose responsibility it is to replace faulty appliances. All appliances should be PAT tested so they are safe.
Repairs: You should also check whether the agent or landlord has a 24-hour emergency line if needed. The landlord should pay for maintenance and repairs, such as a leaky roof or broken boiler.
Renting a room
If you can't afford to rent a whole property, a good way to get to know people and your new area is to move into a shared house. Although previously the choice was thin, there is a new breed of landlords who rent rooms in their own homes, sometimes akin to a 5-star hotel. There's no need to settle for small, pokey, poorly maintained rooms.
Room rents on spareRoom.co.uk range from £70 a week in Halifax to more than £200 a week in Guernsey and central London. To calculate the monthly rent, multiply the weekly rent x 52 and then divide by 12.
You should still ask for an Assured Shorthold Tenancy and ask for proof that any deposit will be registered in one of the official schemes such as with the Deposit Protection Service (depositprotection.com).
Five essential 'to-dos' before viewing a property:
1. Investigate whether it's let by a self-regulated agent or landlord who keeps up with letting law.
2. Ask which tenancy deposit scheme, in which your deposit will be protected, is operated (the rules are different for single room renting).
3. Request to see the gas safety certificate if there is gas in the property, either on moving day or prior to that. A really good agent or landlord will also have an electrical safety certificate no more than five years old.
4. Ask the letting agent or landlord to bring an Energy Performance Certificate (EPC); it's a legal requirement.
5. Prior to moving in and out, or extending your tenancy, make sure you know what fees will be charged.
An increase in the general level of prices that persists over a period of time. The inflation rate is a measure of the average change over a period, usually 12 months. If inflation is up 4%, this means the price of products and services is 4% higher than a year earlier, requiring we spend and extra 4% to buy the same things we bought 12 months ago and that any savings and investments must generate 4% (after any taxes) to keep pace with inflation. Since 2003, the Bank of England has used the consumer prices index (CPI) as its official measure of inflation (see also retail prices index).
A County Court Judgement is a legally issued strike by a lender against a person who has failed to keep to the terms of a credit agreement, usually by habitually failing to make the payments on a loan, credit card or mortgage. A CCJ will appear on a person’s credit record for six years and will certainly affect future applications for credit.