Renting a property might seem like less hassle and financial commitment than buying a home, but it isn’t always as simple as finding somewhere you like, moving in and then paying the rent on time.
Before you embark on renting a property, here are some of the top considerations that you may not have thought about…
References: what landlords and letting agents check
In assessing your reliability as a prospective tenant, private landlords or their letting agents will need to review:
- proof of your identity
- evidence of your right to stay in the UK (passport or immigration documents)
- details of your financial circumstances (employment contract, recent payslips or bank statements, or a letter from your employer confirming your employment)
- references (ideally from previous landlords)
- credit checks (your score and credit history)
- the details of your guarantor (if you have a poor credit history or haven’t got adequate references because it’s your first time renting)
Factor in all costs
Once you’ve saved enough money for your first month’s rent and the deposit, you still need to be aware of extra costs.
In most cases you will be responsible for paying the household bills, some of which might require upfront payment to initially connect or add credit:
- gas and/or electricity
- council tax
- TV license and/or digital/satellite television subscriptions
- contents insurance
- parking permit
- annual service charges (maintenance and repairs to communal areas if renting a property within a larger residential building)
You may also need to consider putting aside a contingency fund, should you need to purchase essential electrical or other goods.
You can get a loan, even if you’re not a homeowner
A secured loan uses an asset – such as a property – as a form of collateral when you enter into a credit agreement with a lender, but what happens if you don’t have an asset to your name? As a tenant, or non-homeowner, you still have a number of options available to you, should you need to take out a loan.
For the UK’s significant population of renters, tenant loans provide the answer. You simply need to be able to demonstrate a steady income, as proof that you can meet your repayments, and the lender will then make a decision about your risk, factoring in your credit history and score. However, it is important to know that lenders base their decisions and loan rates on the calculated risk – statistically UK tenants’ loan failure rates are higher than that of homeowners, so this is reflected in less favourable interest rates for unsecured tenant loans.
Another way to get around the issue of not owning your home (even if you have a poor credit rating) is to apply for a guarantor-backed tenant loan from a specialist lender. With a guarantor loan, the lender balances the status of the applicant with that of their guarantor – the person who is backing the application – ideally, they will have a clean credit file/good history, own a property, and have a regular income. Click on the link for more information on loan options available to non-homeowners.
Prompt rental payments could boost your credit score
Whether you’re a private renter or a social housing tenant, did you know that you can opt for your rental payments to be included on your credit report?
The Rental Exchange Initiative records your rental payments on your Experian credit file and – assuming you pay promptly – this could be really helpful to you in the future, as showing that you’re financially reliable could bump up your credit score.
Check the contract carefully
You could be forgiven for assuming that a tenancy agreement is a comprehensive, watertight legal contract – in most cases they are – but it is always sensible to check through each clause to ensure that you know what you’re agreeing to.
Tenancy agreements should clearly demonstrate both your rights and responsibilities as a tenant. You should be provided with either the new private residential tenancy agreement (PRT) which consists of mandatory and discretionary clauses, or an alternative tenancy agreement, provided the latter sets out all of the statutory terms, namely rent receipts, rent increases, subletting, notification about other residents, access for repairs and termination.
To safeguard both parties, a detailed inventory should also be supplied alongside the tenancy agreement. An inventory is carried out by an impartial professional prior to you moving in, and accurately records all furniture, fixtures and appliances, as well as the condition of those items, and the decorative state of the property. Check this meticulously and update the agent or landlord if you don’t agree to the content of the inventory – you might lose part of your deposit when you move out if you haven’t highlighted discrepancies at the beginning of your tenancy.
If you feel unclear about anything in your contract then seek legal advice before signing on the line. If any modifications are made verbally – either with your landlord or agent – then it’s essential that these agreements are subsequently reflected in your written contract. Visit the Citizens Advice website for helpful and more detailed information on tenancy agreements and inventories.