Advice for tenants renting a property

This information is given for general guidance only and should therefore not be relied on. It has been prepared by an experienced letting agent operating in the UK market.

REFERENCES (see also Credit Scoring & Credit References)

Make sure you have details ready of who is going to provide your references (for example, employers, previous landlord or agent, bank account etc) It is normal these days that if you are renting via an Agents that they will use a Credit Search Company. They will normally make a charge per applicant for this search.

Credit Search Companies normally work on 30 X rent. e.g. rental of £650 pcm X 30 = £19,500 (applicant must earn this amount per annum – if not a guarantor might have to be used) * The credit search company reserves the right to charge for a Guarantor’s reference in addition and this will be charged out at the normal applicant rate.

HOLDING DEPOSIT

If you are paying a 'reservation' or 'holding' deposit whilst your application for a tenancy is processed, make sure you get a receipt and a Holding Deposit Agreement from the Agent that sets out the terms of this initial deposit and any circumstances under which you may or may not get your money back.

RENT

Rent is usually paid a calendar month in advance. The first payment will be made by bankers draft/building society cheque (not a personal one) and or Part Cash.

Because of money laundering regulations most Agents are only able to accept a maximum of £500 in cash. Subsequent payments are normally made by standing order or the Agent or Landlord. If the payment of rent is late, interest is payable as shown in the Tenancy Agreement.

DEPOSIT & INVENTORY

A deposit equivalent to approximately 6 weeks rent will normally be required to settle any claim for dilapidations, or any other breach of the tenancy agreement, which may arise, during the tenancy or at the termination of the tenancy. The deposit will be held by the Agents or the Landlord. If the Landlord is holding it, you should ensure that it is held in a separate bank account, as it is your money and not the Landlord’s.

N.B. From April 2007 under the 2004 Housing Act Landlords will no longer be able to hold deposits with AST tenancies unless they have them registered with a specific scheme. See Tenancy Deposit Scheme

Make sure that you are present to check the inventory when you move in and out of the property so that you can agree to any amendments. We recommend that you keep a signed copy of both the checking in and checking out inventory. This document will form the basis of any compensations claimed against you by the landlord. 

TENANCY AGREEMENT

When the Agents have received acceptable references after consultation with the Landlord, a Tenancy Agreement will be prepared for the Tenant’s signature. The cost. Release Clauses are not normally incorporated in a Tenancy Agreement so if you want a Release Clause, you must agree this before you sign up.

Before you arrange a date and time to sign the tenancy agreement, make sure that you (all tenants) have seen a copy and read it through, so that everyone understands their obligations. Ask questions to clarify anything that you are unclear on. All tenants must sign the tenancy agreement before they can move in. ONCE YOU HAVE SIGNED... 
Keep all your documents (such as insurance policy, copy of tenancy agreement and inventory) together in a file. Keep this file in a safe place

GAS- ELECTRICITY-TELEPHONE (SERVICES)

It is normally a condition of the Tenancy that the services (i.e. electricity, gas and telephone) are transferred into the Tenant’s name for the duration of the Tenancy. If you require the telephone service you will need to contact British Telecom or service provider direct. In some instances, a deposit may be requested from the relevant Companies

COUNCIL TAX/WATER CHARGES/TV LICENSE

Tenants will normally be responsible for the payment of the Council Tax for the property they are renting and will pay this direct to the Local Authority. They must also advise the Local Authority when they move in/out of a rented property. 

Leaflets on Council Tax should be available from the Registration Officer at the Council together with information on rebates etc. A 25% discount is usually available on Council Tax for single occupancy. It is the responsibility of the tenant to pay for a TV License in respect of the property they are renting. In most cases water charges are now paid for by Tenants in renting a property

Water  - Water Industry Act 1991 – Information about water meters for home movers.

Since 1989, most new homes built in England and Wales have had a water meter installed. In addition to this, many water company customers previously on a non-metered supply have opted for water meter.

Since 1^st April 2002 companies like Three Valleys Water Plc in England have been installing water meters when a property is sold. From the 1^st January 2005 this company will also be installing meters when a property is rented out.

The government act covering this is under S1444B of the Water Industry Act 1991.

TENANTS CONTENTS INSURANCE (For Further information CLICK HERE )

Tenants must insure their own possessions, as this is not the Landlords responsibility. You can also arrange this yourself on line by CLICKING HERE. Because of the Regulations on the sales of Landlords & Tenants insurance policies no advice can be given and you must contact Letsure, Homelet or any other provider for advice on policies.

STAMP DUTY ON TENANCY AGREEMENTS

From the 1st December 2003, Stamp Duty has been abolished and replaced with Stamp Duty Land Tax. The starting point for this is £125,000.(UK Budget March 2006)This means that the vast majority of Tenancy Agreements will not attract SDLT.

SAFETY CERTIFICATES

Make sure that you are provided with a Landlords Gas Safety certificate and if you are renting a furnished property that the furniture has fire safety labels on it (arm chairs, beds, cushions etc) and that a note is made on the inventory to that effect. The Landlord must also make sure that electrical wiring and appliances are safe.

LETTING AGENTS 

Many agents belong to professional organisations:

• ARLA (Association of Residential Letting Agents) 

• NALS (National Approved Letting scheme) 

• NAEA (National Association of Estate Agents) or

• RICS (Royal Institution of Chartered Surveyors)

The agent will have certain obligations but these may vary from simply letting the property to letting and managing the property.

Find out what the agent's responsibilities are. If they are simply responsible for letting the building, find out who is responsible for managing/ maintaining the property. 

The agent will make regular checks on the property. Arrange a mutually convenient time for these checks and make a note of it.

SHARING RENTED ACCOMMODATION

• Some Landlords will allow 2 or more tenants to share a property, but the flowing must be noted:-
  All tenants must understand the commitment they are entering into and MUST remain at the property for the duration of the rental agreement. 

• There can be NO assignment of a Lease under most types of Contract, however if one of the tenants wishes to leave and a replacement tenant is found, a new Agreement will have to be prepared to include the replacement tenant (subject to the Landlord’s prior approval) and the costs of the new agreement, including the Landlord’s share, will be the tenant’s responsibility. 

• Credit search references will also have to be taken up on all new Tenants
  All parties to the agreement must sign the Contract prior to moving in. If one of the prospective tenants cannot sign prior to moving in THEN NO ONE CAN MOVE IN UNTIL EVERYONE HAS SIGNED. (A new agreement will not be prepared if the tenancy is delayed by one or more of the tenants not signing on time, unless of course, the tenants are prepared to pay for a new agreement and they would have to pay the Landlord’s costs in addition). 

• It is the practice for Landlords or their Agents to accept the monthly rental by ONE Standing Order payment from the Tenants and we would suggest you set up a “House Bank Account” to cover this and any other outgoings for the property
  

LETTING A ROOM IN A ROPERTY - Where the Landlord lives More information

Many people have decided to let out a room in their own property as a way of helping with morgage costs . HM Revenue and Customs allows the owner occupier a tax-free income of up to £4,250 from letting rooms in your home.

A lodger can occupy a single room or an entire floor of your home. However, the scheme does not apply if your home is converted into separate flats that you rent out. In this case you will need to declare your rental income to HM Revenue & Customs (HMRC) and pay tax in the normal way. Nor does the scheme apply if you let unfurnished accommodation in your home.

The Landlord does not have to be a home owner and can choose to take advantage of the Rent a Room scheme, regardless of whether they are a home owner or are renting their home. However, if you are renting, you should check whether your lease allows you to take in a lodger and ask your Landlord this.

Tenancy Agreements for being a Resident Landlord

Once you have found a property it is best to get the Landlord tp make out a tenancy agreement with them. You do not need to fill in any special forms, but it is best that you make an agreement in writing. This will help you if there are any problems later. There are some basics which should be included in your agreement

• How much notice you must give the Landlord
• How much notice the Tenant should give to the Landlord
• How long is the tenancy is for
• Which rooms are being let
• Which facilities are being shared
• How much the rent will be paid
• Does the rent include bills? e.g electricity, gas, telephone, internet, water, Council tax and even food.
• When the rent is due
• How should rent be paid (cash, cheque, standing order, direct debit etc.)
• Is the deposit payable when the tenant moves in and when it will be returned and how it will be held by the Landlord

Both the Landlord and the tenant should sign the agreement.

©jmlpropertyservices February 2004

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