As a tenant, you not only need to make sure you can afford to pay the rent – you also need to be aware of additional fees involved with your tenancy.
Recent changes to the law now mean that agencies and landlords can no longer charge admin fees. This means you’ll be saving money, regardless of whether you’re a new or existing tenant.
Here’s a guide to the fees involved with renting a residential property, and more information on the agency fee ban.
The costs involved with moving in
There are a few payments you’ll need to factor in when you move into a new property. These are:
- One month’s rent in advance (sometimes more). It’s common practice for your landlord to request a month’s rental payment in advance. The maximum which can be charged is currently capped at five week’s rent. Make sure you find out how much your landlord wants upfront before signing the contract.
- A tenancy deposit. It’s also standard practice for tenants to pay a deposit to their landlord. This is fully refundable at the end of the tenancy, providing there’s no damage to the property, or outstanding bills that need paying. Your landlord or letting agency will handle the deposit, and they’re required by law to place it in a government-approved scheme.
You may also be asked to pay a holding deposit before you move in. This is to reserve the property and provides the landlord with some financial security in case you change your mind further down the line. The holding deposit is capped at one week’s rent, and landlords are only permitted to hold it for fourteen days. It’s also refundable.
Other costs to be aware of
When you’re budgeting for your rented property, you’ll need to be aware of other costs too. These include:
- Your monthly rent
- Interest on your rent, if you make a late payment (landlords are only able to charge this if you’re fourteen days behind with your rent. The interest can’t be higher than 3% above the Bank of England base rate)
- Any bills that you’re responsible for (check your contract)
- Any contractual changes you might want to make (charges for making changes are limited to £50 max)
- Charges for damage or lost items
What happens to my deposit?
Tenants often worry about their deposits. In the past, a few unscrupulous landlords refused to return deposits, citing vague issues such as ‘wear and tear’ as their reason for doing so.
The government stepped in, and now, all deposits must be kept in an approved scheme, not in the landlord’s bank account. This ensures that your deposit is stored safely until your tenancy comes to an end.
There are three government-backed schemes in England, and which one your deposit will be placed in depends on the landlord or letting agency. There are certain legal requirements that your landlord must adhere to:
- They must pay the deposit into the scheme within thirty days of it being received
- They must also provide you with proof that they’ve done so
- Both you and the landlord must agree on the amount of deposit returned at the end of the tenancy
Any disputes are usually dealt with by a letting agency, and the vast majority are easily resolved.
What about the ban on admin fees?
The Tenancy Fee Ban was introduced in June 2019, and has been welcomed by renters across the country. It creates a fairer environment for tenants; preventing landlords from charging fees for certain services.
Landlords and letting agents are now not permitted to charge for:
- Credit checks
- Reference checks
- Other admin costs (such as creating contracts, printing and posting copies of the contract etc.)
- Property viewings
- Professional cleaning (unless there’s legitimate reason for them to do so)
- Checking out at the end of the tenancy
Originally, the ban only applied to tenants who started renting after June 1st, 2019. However, the law was further amended in June 2020, and now applies to all tenants, irrespective of when their tenancy started.
Identifying all costs
Before you sign your contract, it’s important to identify all the costs involved with renting a residential property. If you’re unsure, do remember – that’s what your letting agent is for. They’re there to go through all the costs with you, and to ensure that your rights as a tenant are well protected.