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Renting a home: the first steps

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

In this article
Renting a home Should I use a letting agent?  What are the different types of tenancy agreements? Types of tenancy contracts 
How long should my tenancy agreement last?  How much will my rental property cost?  Do I need a furnished or unfurnished property? 

Renting a home

With a fifth of households in the UK now privately rented, the demand for the right rental home can be high – and so can the costs. The average monthly rent in England is £675, while in London it’s a staggering £1,400.*

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. 

Should I use a letting agent? 

For many people, a letting agent will be the first port of call when looking for somewhere to rent, but be aware that they can come with extra fees including charges for credit checks and setting up the inventory. 

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

In some cases they even manage the property on behalf of the landlord, so it's worthwhile investigating just how involved your letting agent will be.

A perk of dealing with letting agents is that they must be part of an approved redress scheme that can mediate in disputes between landlords and tenants. 

The letting agent 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

What are the different types of tenancy agreements?

A tenancy agreement is a contract between you and your landlord. The type of agreement will depend on the cost of rent, if the landlord also lives in the property or even what year you made the agreement. The most common type is an assured-shorthold tenancy (AST). 

Assured-shorthold tenancy (AST)

Most tenancy agreements are an assured-shorthold tenancy agreement for a fixed term – usually six to 12 months.

A tenancy can be an AST as long as the property is private, the landlord does not live in the home and the rent is less than £100,000 per year. 

Your deposit must be protected by law under this agreement and at least two months’ notice to leave is required. 

If you have an AST tenancy, you will either have a private landlord that you deal with directly or you will communicate with a property management company that either owns the home or manages it on behalf of the landlord. 

Excluded tenancy

You will receive an excluded tenancy agreement if you live with or share rooms with your landlord, ie lodging. If you’ve paid a deposit, the resident landlord is not required to protect it and, depending on your agreement, there is typically no necessity for the landlord to serve notice. 

Assured tenancy

This is a rare type of tenancy that is usually granted by housing associations. They offer more security as the terms typically state you can continue to live in the property for the entire length of time initially agreed. The landlord does not have the automatic right to repossess the property when the term ends and could only serve notice if the tenancy terms are broken. For example, if the rent isn’t paid. 

Regulated tenancy

A regulated tenancy is a long-term contract with a private landlord. If you started a tenancy before 15 January 1989 with a private landlord it is probably a regulated tenancy. Under this agreement tenants are entitled to a fair rent set by the Valuation Office Agency.

Types of tenancy contracts 

There are two main types of tenancy contract that your landlord might offer:

  • A joint tenancy agreement This holds the whole group responsible for the property and collective rent payments.
  • An individual contract This contract is between each tenant and the landlord. If you have the choice, ask for this type of agreement as this means if one person leaves the house for any reason or pays rent late, the other tenants will not be liable.

If you want to know more about what your contract should include, take a look at our letting agreement checklist

How long should my tenancy agreement last? 

Most tenancy agreements last for a year and normally no longer than three years – this offers the landlord a financial guarantee for a significant period of time and also gives the tenant enough freedom to leave the agreement if needed. 

If you’re a student or you’re planning to move job or area in the not-too-distant future, then it’s probably best to make sure you stick to a six-month or one-year agreement. 

A break clause is also quite standard now, too. This allows the tenant and the landlord to end a fixed-term tenancy early. 

Fixed-term tenancy

Most ASTs are on a fixed-term tenancy to begin with. These types of tenancies lasts for a set time agreed by the landlord and tenant – typically between six months and a year or two. 

You can only end a fixed-term agreement early if there is a break clause, or if the landlord agrees you can move out. 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 until one of you formally give notice.  

Periodic tenancy

Otherwise known as a ‘rolling’ contract, a periodic tenancy runs month-to-month and typically begins after the fixed term has expired. All the same terms and conditions of the original agreement will apply.  

How much will my rental property cost? 

Renting is not a cheap process and it’s wise to make sure you’re financially setup before starting your search. Here are the costs you could face before securing your rental: 

Rent costs

First off, research the areas you can afford. The average cost for rent in England is £675 a month, but for London that figure jumps to £1,400. 

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, though. 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 which can work out cheaper and is a great option for tenants in shared houses. 

Try to be flexible with your property search. A garden can add a lot on to the rent so if it isn’t a necessity take it off your checklist. Or, try looking a little further away from central locations or main transport stations – the convenience will cost more. 

Be sure to budget for your outgoings as much as you can. Set up direct debits and check you’re on the best energy tariff for your household. 

If you think you’re paying over the odds for your energy use our independent switching site, Which? Switch, to compare prices and find out.

Holding deposits

A letting agent may ask you to pay a holding deposit, especially if you are searching in big cities, such as London. 

A holding deposit is paid when you intend to rent a property and want the letting agent to place a hold on the property being shown to other prospective tenants, while you go through the referencing process before you sign a tenancy agreement.

If you pay a holding deposit to the letting agent, 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.They can cost as little or as much as you or the landlord wants, but it’s typically between £100 and £500 depending on the value of the rent. 

At the moment, holding deposits don’t have to be protected in a deposit protection scheme, so you may have difficulty getting all of your holding deposit back if you decide you no longer want to rent the property.

Security deposits

You’ll also have to pay a security deposit before moving into a new rental. This will cover the costs of any potential damages or unpaid rent. 

Most security deposits are four weeks’ rent, although some agents charge up to six weeks. This will have to be paid on top of your one month’s rent in advance. 

If you have an assured-shorthold tenancy make sure any deposit given is paid into an accredited tenancy deposit scheme, protected under one of the three government-approved Tenancy Deposit Protection Schemes.  

Your landlord is legally required to place your deposit into an authorised deposit protection scheme within 30 days of receiving it. Your landlord must also give you details of the scheme used, alongside information about your rights.

If you’re moving from one rental to the next don’t rely on the deposit you have in your current home to pay for the next one – most will take a few weeks to be released and some costs could be deducted. 

Make sure you understand your rights before handing over money. Find out more in our guide to tenancy deposit schemes. 

Fees 

If you’re dealing with a letting agent you may also be charged for setting up a tenancy agreement, conducting an inventory, checking references and credit reports, and registering the deposit in a government-approved scheme. 

Our research found the average cost for mandatory administration and referencing fees across all letting agents was £310, and the highest was £420. 

Some tenants could also face check-in and check-out fees, bringing the total closer to £600.

The Consumer Rights Act 2015 has made it a legal requirement that letting agents in England and Wales must clearly display all their fees at their business premises and on their website.

Do I need a furnished or unfurnished property? 

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

The advantages of opting for a furnished rental are: 

  • Less expense – 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.

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 in the long term – 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. 

Not sure what your responsibilities are as a tenant? We explain everything you need to know about maintaining your rental property so you don’t get caught out. 

*Source: Valuation Office Agency. Median monthly rent for England and London in April 2017 to March 2018

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