From the new ban on some of the fees tenants pay to a cap on the sum tenants pay as a deposit, here’s the lowdown on what’s new and what you need to consider for a stress-free rental
There was some good news for tenants last month as a law change slashed the costs they will face at the beginning of a new rental agreement. On 1 June 2019, the long-awaited Tenant Fees Act came into effect, banning letting fees paid by tenants in the private rented sector and capping tenancy deposits in England.
Landlords and agents can no longer charge tenants fees for the cost of getting a reference, arranging an inventory or for renewing a tenancy agreement.
If you are plan to rent from a private landlord, the only payments you should be asked to make are:
- the rent;
- a refundable deposit, which will be capped at five weeks’ rent where the total rent is less than £50,000 a year;
- a refundable holding deposit of no more than one week’s rent;
- payments to change the tenancy when requested by the tenant, capped at £50 or at a reasonable charge if costs are higher;
- payments to end a tenancy early, when requested by the tenant;
- payments for utilities such as council tax and broadband; and
- a default fee for late payment of rent or for lost keys if this has been specified in the tenancy agreement.
An end to no-fault evictions?
Tenants may also gain more security and be able to stay in their homes for longer should further government proposals come into force. In April, the government proposed plans to repeal Section 21 of the Housing Act 1988, which currently gives landlords the right to give tenants eight weeks’ notice to leave without giving any reason at the end of their tenancy agreement or at any time if tenants are in a ‘rolling’ tenancy after their original agreement has ended. Should the repeal go through, tenants would be offered longer tenancies of up to three years rather than the standard one year in the most common type of tenancy agreement, an Assured Shorthold Tenancy (AST). Unscrupulous landlords would no longer be able to evict tenants simply because they complained about poor maintenance or repairs, for instance.
How do I find a good letting agent?
Top of any tenant’s wish list should be finding a decent landlord or letting agent. And this is down to careful vetting rather than good luck. Bad Tenants, Rogue Landlords on catch-up TV shows how nasty things can get for both parties when things go wrong.
Look out for letting agents that are members of a recognised trade body, which offers a client money protection scheme to protect your money if the agent goes bust, as well as an independent complaints procedure. Schemes to look out for are:
- ARLA Propertymark (Arla.co.uk)
- Property Redress Scheme (Theprs.co.uk)
- Safeagent (Safeagents.co.uk)
- The Property Ombudsman (Tpos.co.uk)
- UK Association of Letting Agents (Ukala.org.uk)
Online letting agents such as I Am The Agent, LetBritain, OpenRent, and Upad belong to one or more of the regulatory schemes and are free for tenants. These sites may also advertise on property portals such as Rightmove, Zoopla and Prime Location – something landlords cannot do without an agent.
There are also websites that act as property marketplaces rather than letting agents, such as Ezylet (Ezylet.com), Find a Flat (Findaflat.com), Spare Room (Spareroom.co.uk) and The House Shop (Thehouseshop.com). Tenants can join for free, but have to pay if they want ‘early bird’ viewings of new listings. The websites are just a platform: landlords or their agents will deal with all viewings and contracts and deal with tenants’ rent or deposits or belong directly to any regulatory scheme.
For useful information about renting in the UK and local agents, Thetenantsvoice.co.uk offers guides and online forums. You can search for letting agents by postcode, with details of whether they have been approved and vetted by the site or not.
Don’t drag your heels when it comes to booking viewings as good properties get snapped up. To make sure you have the best chance for a landlord to pick you over other prospective tenants, you need to be organised.
Make sure you have paperwork, such as your passport (and visa if necessary), proof of employment and bank statements to hand – plus the funds for the deposit and first month’s rent.
How do I check the landlord?
There are ways to protect yourself against rogue landlords too – for example, you can ask if the landlord belongs to an accreditation scheme.
Two main schemes are run by the National Landlords Association (NLA – Landlords.org.uk) and Residential Landlords Association (RLA – Rlaas.co.uk). Members of the NLA can show you their membership card while RLA members can display a badge on the windows of their rental property.
If you are looking for a London property, there is also the London Landlord Accreditation Scheme (Londonlandlords.org.uk).
If you want to be sure the landlord is the legal owner of the property, it only costs £3 to download a copy of the title register from the Land Registry at Eservices.landregistry.gov.uk. This will confirm the owner’s name and address, and whether they have a mortgage on the property.
Some councils run accreditation schemes and list approved landlords and agents on their websites. Visit Accreditation Network UK (Anuk.org.uk) for more details.
Meanwhile, don’t be embarrassed to have a quiet word with the current tenants if you get the chance.
How much will it cost to rent?
Affordable housing should cost no more than 35% of your post-tax income, says the poverty-fighting charity Turn2us.
So, for example, if you earn £25,000 after tax and benefits, you should be spending no more than £729 a month on rent.
In some parts of the country this is not so easy – and expect to pay much more in London.
Private tenants spend 30% of post-tax income on rent on average, according to the latest research by the property portal Zoopla.
If you work from home and can live anywhere, renting in the North is the most affordable it has been for 10 years – for example, rents are up by just 1% in a decade in the North East with the average monthly rent just £452 a month. However, this compares with £1,249 a month in London – an 18% rise since 2007.
Do the rules differ for a lodger?
Not everyone can afford a whole property, so another option is to look for a room in a shared house or to become a lodger.
As a lodger, you won’t need to sign an assured tenancy agreement and your deposit won’t be protected, but it is sensible to draw up a written agreement regarding notice periods and any other restrictions.
As well as a messaging service where tenants can arrange viewings with landlords or potential room-mates, popular flatshare site Spareroom.co.uk runs ‘speed flatmating’ events in London and Manchester, where you can meet several potential flatmates in one go. It’s free to place a listing, or you can pay extra (from £10.99 a week) for ‘early bird’ access to listings.
You can also look for a room at Roomgo.co.uk (free for non-premium renters or from £9.99 for a week with access to premium listings) and TheHouseShop.com (free).
If you plan to be away at weekends, you can save money by arranging a rental from Monday to Friday – Fivenights.com and MondaytoFriday.com are both free for lodgers.
Is the property energy efficient?
It is worth checking the property’s energy efficiency before you sign up, as you could save hundreds of pounds a year on your energy bills.
Since 1 April 2018, it has been illegal for landlords to let out a property with a poor energy efficiency rating. Properties are graded from A to G for energy performance, and private rental properties need to have a minimum rating of E on the Energy Performance Certificate (EPC) your landlord must provide.
If the property you are considering has a poor energy rating, it is worth discussing any improvements that the landlord can make – such as improving insulation and adding thermostats to radiators, for example. If this is not possible and poor energy efficiency will impact on your household bills, then it may be wise to look for another property.
Do I need a guarantor?
If you are a student or have difficulty proving that you can afford the rent, you may need a parent or close relative to act as a guarantor. They will agree to pay the rent if you don’t pay it.
Landlords will expect the guarantor to live in the UK as it is difficult to check affordability or take legal action for unpaid rent if they live abroad.
If you are from overseas and can’t find a guarantor in the UK, one way around the problem is to pay six to 12 months’ rent in advance. Alternatively, you could pay for a UK guarantor service. Housing Hand (Housinghand.co.uk) charges a one-off fee, which varies depending on the amount of rent and whether you are a student or professional. For example, fees for students work out at between 60% and 95% of the monthly rent, subject to a minimum of £295 and can be paid in instalments.
How do I protect my deposit?
Before signing a tenancy agreement – usually in the form of an assured shorthold agreement – make sure it mentions which government-backed scheme the landlord or letting agent will use to protect your deposit. In England and Wales, there are three authorised schemes: Deposit Protection Service, My Deposits and the Tenancy Deposit Scheme.
Your landlord has 30 days to protect your deposit and to provide you with information about the scheme. At the end of your tenancy, the landlord must return the deposit within 10 days – unless there is a dispute, which the scheme can help mediate.
For more information on this, visit Gov.uk/tenancy-deposit-protection or Gov.scot and Nidirect.gov.uk for schemes in Scotland and Northern Ireland, respectively.
What if I can’t afford a deposit?
Given that most tenants will pay £1,000-plus as a deposit, as well as having to cough up the first month’s rent, some companies have started to offer deposit-free insurance – but tenants are still liable for damages or unpaid rent at the end of the tenancy.
Instead of paying the deposit upfront, tenants will usually pay one week’s rent to the scheme provider, which will cover losses of between six and eight weeks’ rent. If there is a dispute with the landlord for damages, then these schemes will take on the job of recovering the money from the tenant.
For more details on this type of product, look at companies that offer a dispute resolution service and are FSCS protected such as Canopy (Canopy.rent), Nil Deposit (Letalliance.co.uk), Reposit (Getreposit.uk) and Zero Deposit (Zerodeposit.com).
But remember, most tenants will receive all of their deposit back: if you can afford to pay upfront, it will probably be cheaper in the long run.
Do I need an inventory?
It is important to get an inventory to record the property’s condition at the start of the tenancy so that you can prove that any damage was normal wear and tear or was already there when you moved in. Also take plenty of photos to keep with the report.
Some landlords will conduct the check-in jointly with the tenant – Open Rent (Openrent.co.uk) offers a useful DIY template for you both to sign after the check-in and check-out – while some landlords prefer to pay for an inventory professional to carry out the service, but they will be liable for the cost.
At the time of writing, the Creditworthiness Assessment Bill was awaiting a second reading in Parliament. The Bill says that if tenants pay their rent on time, it should help strengthen their credit histories – as is the case with homeowners making mortgage repayments.
Hopefully, this will come into effect later this year, but if you want to improve your credit score now and are confident that you will not miss a rent payment, then you can sign up to Creditladder.co.uk. Pay your rent by a standing order through the app, and Credit Ladder will tell the credit score company, Experian, that you have paid the rent on time, so it can be added to your credit history.
However, it is worth noting that while many lenders use Experian, financial firms with one of the other agencies may not see your credit history and Credit Ladder is not a member of the Financial Services Compensation Scheme, so your rent money will not be protected.
Five tips to avoid rogue landlords
- Beware of scammers who break into empty properties and let them out or rent a property and pretend to be the owners. Always ask for the landlord’s full name and UK address and consider checking with the Land Registry whether they own the property (see page 71). You can also ask to see their ID.
- Never hand over money for a property that is advertised online that you (or someone acting on your behalf) has not viewed.
- Never agree to give cash upfront or to wire over money (via Western Union, for example).
- Avoid landlords who are prepared to waive the deposit or want to add it on to the rent.
- Ask to see a draft of the tenancy agreement and check for details of the deposit scheme. Ask for copies of the gas safety certificate, energy performance certificate and the latest version of the government’s How to… Rent guide before you sign up.
‘Give the property a good once-over – don’t assume the agent has done it’
Edward Lawrence, director of client services at Lacuna Productions, rented a three-bedroom house in Bristol with two friends until April 2019 but had problems with the letting agents.
“As soon as we moved in, the shower didn’t work despite it being recently fitted. The letting agent arranged for someone to fix it but didn’t tell us the date, so we were at work.
"In the end, I had to take a half day’s leave to be there for the appointment,” he says.
“The shower screen wasn’t wide enough, so water dripped down the side of the bath. I noticed that the edge of the bath had started to swell, so I reported it to the letting agents. They arranged for the side of the bath to be replaced but tried to charge us £150 extra because they said we didn’t report it in time.
“So far, my experience as a tenant has been expensive. My advice would be to give the property a good once-over and not assume it has been done by the agent. Report any issues immediately while keeping a record of phone calls, emails and all correspondence.”
Ed has now moved into a three-bedroom house in the same area through Bunk, a rental app, which tenants and landlords can use without the need for a letting agent.