Rental Properties: Understanding the Basics

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There will likely be many questions that will cross your mind prior to renting a property, but this is just a basic list of a few of the more common questions.

1.Will I need to pay fees to the agent?

You won’t need to pay an introductory fee for just registering with an agent however there will be fees for such administrative tasks as referencing and if you sign on from inventories and preparing the tenancy agreement. Letting Links is an alternative to traditional agents as it’s a completely free service for both landlords and tenants.

2. What is a holding deposit and do I get it back?

A holding deposit is usually a small amount that is requested in order to show your interest in the property. If the landlord does not go ahead with the tenancy it will be returned to you. If for some reason you decide not to go ahead and sign, all or a portion will be kept to cover administrative costs incurred. After referencing it will be put towards either the first month’s rent or security deposit.

3. What sum of money will I require at the beginning of the tenancy?

Generally you will need to have enough for first month’s rent as well as a month to six weeks’ worth of rent to be held as a security deposit towards damage. Assuming there are no damages at the end of tenancy you will receive this amount back at the end.

4. What information will I need to supply to Letting Agent?

You will be required to supply the names and addresses of your referees, as well as previous landlords and possibly your employer, so
that they will be able to verify your ability to pay for your rent. If self-employed it may be necessary to supply the contact information for your accountant.

5. As a Tenant what are my responsibilities?

All of your responsibilities should be written in the tenancy agreement. Make sure you take the time to read it very carefully and if you are unsure of something, ask your agent to explain. Do not sign anything until you feel comfortable you understand fully.

6. What is a Tenancy Agreement?

This is the legal document that outlines your responsibilities as tenant, your rights and what you can expect from your landlord, how much rent you are expected to pay, and the term of tenancy. This contract is between you and the landlord will most likely be an Assured Shorthold Tenancy under the Housing Act 1988.

7. How long can I expect to wait for referencing before I can move in?

Each agent is different however it can take between five and ten working days by the time they contact references, make sure funds clear for the first month’s rent and deposit, and inventories arranged.

8. What is the normal tenancy term?

Most agents like to sign an agreement for six months. They rarely sign for periods over a year. After this period you can take out an extension or renew your tenancy agreement.

9. What if I want to leave earlier or stay for a longer period?

Getting a longer period is usually as easy as signing a new agreement. If you think you might want to leave earlier however, you should have a break clause included in the original agreement or you will be
responsible for the entire term of the original tenancy agreement.

10. What other bills would I be responsible for?

You will need to take care of the utilities (gas, water, electricity), the Council Tax on the property, and of course telephone and T.V.

11. How do I get my Deposit back?

At the end of tenancy the landlord will usually do a “checkout” with you, where they check for missing items or damage. If the property is in satisfactory condition you will receive your deposit shortly after leaving the tenancy. Just remember you are not allowed to use the deposit as your last month’s rent.

Tenant Insurance: Friend or Faux?

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As a tenant, it is your responsibility to obtain contents insurance that will adequately cover you for your possessions. Most landlords and letting agents will request proof that such insurance has been put in place prior to signing the tenancy agreement. If you are unsure as to where you might get contents insurance and are dealing with an agent, he will most likely be able to lead you in the right direction. If the agent is authorised by the Financial Services Authority (FSA) or is directly regulated by an FSA broker, then he would be eligible to sell you such insurance.

Since you don’t own the building you do not need building insurance, just contents only.

You might also look at getting Specialist Tenant’s Content Insurance which would protect your deposit should there be any damages to your landlord’s inventory. Accidents do happen to the best of us and who wouldn’t want to protect themselves in this unlikely event?

Contents Insurance generally covers the following:

Accidental damage: this would include damage to electronic equipment such as TV’s, stereos, DVD’s and even LCD and Plasma

New for Old Replacement: if items are damaged or stolen you would receive a new replacement for the old one that’s been damaged or stolen

Replacing Locks and/or keys: would cover the cost for new keys if lost, replacing locks, safes or alarm systems

Coverage for Cards and Cash: generally you’d be covered for £500 in cash and £500 for credit or debit cards

On top of this coverage you can make sure that the contents insurance not only covers your possessions but also covers your landlord’s contents. This would include light fixtures, furnishings if applicable, carpets or appliances. If an accident does occur, it would be nice to know that the repair of the landlord’s contents can be paid for instead of it coming out of your deposit at the end of the tenancy. Don’t forget, your landlord expects to get his property back in the same condition it was in when you rented it! Even if it’s just a stain on a carpet.

Don’t let a little accident cost you more by losing your deposit. Protect everything that belongs in your rental property and you will be able to sleep easy at night knowing you won’t have to worry about a thing.

Deposit Loans — No Deposit? No Problem!

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There are several reasons why someone would need to take out a deposit loan, and since it is necessary to have a deposit in order to rent a house, the need has become greater than ever. So if you can’t raise the cash yourself, you’ll need to look at your options and decide what is best for your specific needs.

Not all companies offer the same products and you will have to do some homework if you want to get the best rate and an appropriate pay back term. Some of the things you should be looking at;

Do you want a short term or long term loan?
If you only require the amount of the deposit for a short time, for instance if
you will be receiving a deposit returned to you from a previous landlord, then
you can shop for a short term solution.

If however your budget is stretched fairly tight and you’re looking to pay back a small portion monthly in order to manage your finances on a monthly basis, then look at paying back over a longer period of time.

Now, how much of a loan should you take out? First you need to figure out what the deposit will be and will you require money for the move itself. Since you want to get the entire loan from one source, so you won’t be burdened with too many monthly payments, finding out the usual amount of deposits being requested in your area is vital.

Are the agents asking for £500, £750, £1000 or more for deposits?

Okay, so now you’ve decided how much you need and how quickly you’d like to pay it back. The next item you should be checking into is the APR (which stands for Annual Percentage Rate). Shop around for the best rate as this is the interest rate you’ll be paying on the money you borrow and is an extremely important consideration.

Obviously you’re looking for the lowest APR so that the amount you pay back is the least amount possible. For instance if you borrow £1000 at 10% APR, you will be paying £100 over a 12 month period for a total payback of £1100. Be cautious when looking at the rates because some rates will appear higher if a short term loan is being listed for a 12 month term even if the loan is only for 1 month.

The loan market is always very competitive and there are many companies all vying for your business. As with any portion of the rental process, each decision is what you feel is best for you and what you feel most comfortable with once the decision has been made. Shop around and you should find a perfect match for your needs.