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Renting a home: what you need to know

From tenancy agreements to deposits, renting a home can be confusing. Here's what you need to know before you begin:

With around a fifth of households in the UK privately rented, the demand for the right rental home can be high - and so can the costs.

In January 2023, the average monthly rent in Britain (excluding London) was £987 a month, while in inner London it was a staggering £2,546, according to estate agency Hamptons.

So, whether your lease is just about to run out, your landlord is selling up or you've been planning a fresh start for a while, it really pays to do your research before picking a new rental property.

Here, we detail what you need to know and the steps you need to take to choose the best rental home for you. 

Check how much rent you can afford and set a budget

Renting is not a cheap process and it's wise to make sure you're financially set-up before starting your search. 

According to the government, 35% of your take-home pay is the most that many people can afford to pay for their rent.

Prices have rocketed in recent years, so you will need to figure out your budget before you start considering properties.

Here are the costs to consider to secure a new rental property:

Monthly or weekly payments

Property costs will be advertised as 'pw' (per week) or 'pcm' (per calendar month) and you will normally have to pay your first month's rent in advance. 

Be careful not to calculate the monthly rent by multiplying the weekly charge by four. A typical month lasts longer than 28 days, so the extra days' rent you don't include will add up and could leave you budgeting less money than you need.

Some agreements also include bills within the rent, just make sure what's included and what you will have to pay yourself. 

Holding deposit

You might be asked to pay a holding deposit to reserve a rental property. 

Holding deposits are capped at one week's rent in England and Wales but are banned in Scotland. 

If you pay a holding deposit, it means that you're committed to renting the property and that the landlord is committed to renting the property to you, providing checks are successful. 

Tenancy deposit 

You'll also have to pay a tenancy deposit before moving into a new rental. 

In England, landlords can take up to five weeks' worth of rent or six weeks' if the cost of the rent is over £50,000 a year.

In Scotland, the limit is no more than two months' rent.

There’s no formal cap in Wales and Northern Ireland but tenants usually pay one month's rent as a tenancy deposit.

The money you pay acts as security during your tenancy but must be protected.

Decide if you want a furnished or unfurnished property

You probably know how many bedrooms you want and if you need a garden but a key choice to make - which will impact your budget - is to whether to go for a furnished or unfurnished rental property.

A furnished property should come with everything you need to live comfortably, including white goods such as a fridge and washing machine. It will also include other key items of furniture such as sofas, bed, drawers, dining tables and potentially kitchenware.

The advantages of opting for a furnished rental are:

  • Less expense from the outset - you won't need to pay out a large sum of money to buy all of your furniture before moving in. Although it's worth noting might mean the cost of the rent or deposit could be more to cover the additional items included.

  • Convenient - you can move in quickly. You won't need to spend your time lugging large items between houses or setting up furniture. Great if you're a student or don't plan on staying in one place for too long.

  • No repair costs - depending on your agreement, most landlords will be in charge of repairing or replacing some of the main items in the home if furnished. For example, if the fridge breaks down due to general wear and tear the landlord would replace it.

While getting a furnished home is the simpler option, be aware of the disadvantages as well. The rent could be at a higher price as the landlord is supplying furniture, and you'll likely have to pay costs for damaging the furniture should you spill coffee on the sofa, for example.   

What's included in an unfurnished property will vary depending on the agent or landlord. Basic features such as a fridge and a cooker should come as standard but other items will need to be supplied by the tenant.

The advantages of opting for an unfurnished property are:

  • Cheaper rent - the rent and deposit could be lower if you opt for an unfurnished property because it's less hassle for the owner. You are also setting yourself up for your next property, whether you're planning to buy or rent.

  • Make it your own - some furnished properties are very basic and won't allow tenants to personalise the home with their own things.

  • Deposit deductions - the more furnishings in the home could mean the more likely you are to have costs deducted from your deposit for wear and tear.

Unfurnished properties also come with their disadvantages, so you need to weigh up which type of rental suits your needs. You will need to adjust your budget to make room for buying furniture and factor in more time in getting what you need.

Moving in and moving out will also prove to be more hassle with unfurnished homes as transporting your furniture can be complex. Hiring a removals company can also be costly. 

Look for rental properties and arrange viewings

You can search for properties online through websites such as Rightmove and Zoopla but you might also want to use a letting agent to help you find a place.

Letting agents will advertise rental properties, arrange viewings and help negotiate the tenancy agreement. 

A perk of dealing with letting agents is they must be part of an approved redress scheme that can mediate in disputes between landlords and tenants. They must clearly state which scheme they are members of. The three government-backed schemes are:

  • The Property Ombudsman (TPO)

  • Ombudsman Services Property

  • Property Redress Scheme

Once you have a shortlist, see if you can arrange in person viewings. This will help you to inspect the property for mould or damp and check appliances are in good working order.

Be ready for credit and Right to Rent checks

If a property takes your fancy, you should make an offer.

In order to get an offer approved to rent a property you will normally need to pass certain checks.

You will likely need to go through a credit check, so make sure your credit report is in good shape and doesn't contain errors.

Landlords in England must also check that all people aged 18 or over living in their property have the right to rent. This means you will need to have proof of your ID ready to hand over. Tenancies in Scotland, Wales and Northern Ireland are not subject to Right to Rent checks.

Check your tenancy agreement

Once your offer has been accepted and you’ve passed the required checks you should be able to sign a tenancy agreement.

A tenancy agreement is a contract between you and your landlord, which is put in place before the property is let out. It outlines both parties' rights, giving protection to the tenant and the landlord’s right to receive rent.

The type of agreement will depend on a number of factors including the cost of rent and whether the landlord also lives in the property.

The main type of agreement most commonly used is an assured-shorthold tenancy agreement (AST). They are usually set for a fixed-term of six months, a year or two years.

If you want to know more about what your contract should include, take a look at our in-depth guide on tenancy agreements.

Get proof your deposit is protected

Once the contract is agreed, your landlord will likely require a security deposit from you. This covers the cost of any damage you make to the property while you live there, or any unpaid rent.

You will get your money back at the end of your tenancy if you have:

  • met the terms of your tenancy agreement

  • haven't damaged the property

  • paid your rent and bills

Your landlord must, by law, put your deposit in a government-approved tenancy deposit scheme (TDP) if you rent your home on an assured-shorthold tenancy.

The landlord is legally required to protect your deposit within 30 days of receiving it. They must also give you details of the scheme used, alongside information about your rights.

Living in your rented home

Having now moved in, there are rules and expectations for you to follow as a tenant.

What bills do I pay as a tenant?

As the contracted tenant, you must pay your rent. If it is more than 14 days late, you could be liable for a default fee. 

The default fee - which is limited by the Tenant Fees Act - is the outstanding rent amount, plus interest capped at 3% above Bank of England base rate.

Failing to pay your rent could lead to eviction.

Most rental agreements (that don’t include bills) also state that the tenant is liable to pay all the utility bills, including: water, gas, electricity, council tax, TV licence and broadband. 

What to expect of your landlord

Your landlord is responsible for keeping your home safe and warm. You should have a working water supply and safe access to gas and electricity.

They must arrange an annual gas safety check and arrange a five-yearly electrical safety check. They must ensure the property is  fit for human habitation’ - meaning it is safe, healthy and free from things that could cause serious harm. 

If an issue with the property threatens your health and safety, you must report this to your landlord as soon as possible.

This could include a boiler breakdown, leaky pipes, faulty or exposed electrical wiring, damp problems, pest infestations, and broken doors and windows.

What is expected of the tenant?

As a tenant, you're usually responsible for the general upkeep of the property, such as changing light bulbs, unblocking sinks, gardening and cleaning.

Check out our in-depth advice guide for more details on rental property maintenance and repairs.

As a tenant, you should also consider securing insurance for your contents and belongings. The landlord will usually have insurance for the property, but it will not cover anything that belongs to you.

You must not take in a lodger or sublet the property without checking if you need permission from your landlord.

What happens at the end of a rental term?

There are three main options you can take when your fixed rental term comes to an end.

1. Let it become a rolling or periodic tenancy

If you continue living in the property after the fixed-term has ended and it has not been renewed, your tenancy will automatically become a periodic tenancy.

A periodic tenancy is a rolling contract which runs week-to-week, or more than likely month-to-month. It begins after your previous fixed-term ended. 

Under this new form of tenancy, all the same terms and conditions of the original agreement apply. It is ideal if you do not want to be tied into a new fixed-term and are planning on moving out soon.

You can usually end a periodic tenancy by giving your landlord one month's notice.

2. Renew your tenancy for a fixed-term

You could have the option to renew your tenancy agreement for another fixed period of time, such as another 12 months.

You won't be charged a fee to renew your contract, however, the terms - such as your rent costs - may not be the same as in your original agreement.

3. Leave the tenancy

The end of your fixed-term is prime time to leave if you want to move on as you won't be breaking your tenancy agreement.

Make sure to inform your landlord of your intention to leave at the end of your term before you're put onto a rolling contract.

Will my landlord increase my rent if I stay?

When you come to renew your tenancy agreement, your landlord may want to increase your rent. They usually aren't allowed to increase your rent during the term covered by your tenancy agreement.

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