Before you agree to rent a property, you need to make sure that you can afford to pay the rent, rates and utility bills. If you fall into arrears, your landlord can take you to court to recoup the arrears and evict you. There are a number of additional costs that you should bear in mind, when deciding if a property is affordable.
Deposits and rent in advance
Most landlords and agents will require you to pay one month’s rent in advance and a deposit, (usually the equivalent of one month’s rent), on the day you sign your tenancy agreement.
The deposit is held as security against any damage you may cause to the property or against you ending the tenancy early. If you paid your deposit on or after 1 April 2013 your landlord has to make sure it is protected with an approved tenancy deposit scheme. If you paid your deposit before 1 April 2013 your landlord or his agent will usually hold the money until the tenancy ends.
The landlord can use some or all of your deposit if he or she has incurred any actual financial loss as a result of your actions. This might happen if you have damaged furniture provided with the property, you owe the landlord money or you left your tenancy early and the landlord had to pay an agent to find new tenants.
Rent in advance
In most private tenancies rent is paid on the 1st of the month for the coming month. This is referred to as rent in advance. You should note that Housing Benefit is always paid at the end of the month. It is never paid in advance. If you want housing benefit to cover your rent, you'll need to make sure you have enough saved up to pay your first month or try to get a loan for this from the Discretionary Finance Support Fund.
Housing benefit and Universal Credit
Benefit help for most people who rent privately is worked out under a set of rules known as the Local Housing Allowance system. Whether you receive Universal Credit or Housing Benefit, the Local Housing Allowance rules will restrict the amount of financial help you will get towards your rent. The restriction will be based on the size of your household, your age and on where your property is located. This means that most private tenants who receive benefit help with their rent do not get enough money to pay their full monthly rent.
If you are going to need benefit help to pay your rent, you should check how much you will be entitled to before you sign your tenancy agreement. An advice agency like your local Citizens Advice Bureau can carry out a benefits check for you or you can use the Housing Executive's QuickCalc system to get an estimate of what you'll be entitled to. If your housing benefit or Universal Credit payment doesn't cover your full rent, you will be responsible for paying any shortfall directly to your landlord.
If you are a private tenant you may be legally responsible for paying rates on your rented home. If you are legally liable for rates you should pay these directly to the Land & Property Services (LPS) rather than allowing the landlord to deduct an amount for rates from your rental payments.
In some cases, landlords have failed to pass rent payments on to LPS and LPS has taken legal action against the tenant to recover this money. It's essential that you understand who is legally responsible for paying rates and agree how this money will be paid before you take on a new tenancy.
Estate agent fees
There is a piece of legislation which suggests that many fees charged by agents to tenants can be reclaimed. A recent court decision confirms this. Rather than refuse to pay a fee, you could pay the money, get a receipt and then try to claim the fees back from the landlord, citing the Commission on Disposals of Land Order (NI) 1986. Use our template letter to help reclaim your fees. This legislation only applies to fees charged by agents, and doesn't include any fees that you pay directly to the landlord.
Any fees you'll be expected to pay must be clearly shown on the advertisement for the property. If your property is managed by an agent, they may charge you an “application fee”. In most cases, this fee will pay for a credit check, carried out by another company. You can't be forced to pay these fees, but the agent may refuse to rent the property to you without a valid credit check. The fees should just cover the cost incurred by the agent and the agent or landlord should not profit from charging you this fee.
You should not be charged a fee simply for asking the agent to add you to their list of people looking for accommodation. If an agent tries to charge you for being added to a client list, get advice before handing over any money.
Some agents may levy extra fees on you at the beginning of a tenancy. You do not have to pay these charges, and a recent court decision in Northern Ireland suggests that many fees agents charge could be unlawful. If a fee is unlawful, you can argue that you don't have to pay it or pay it and later try to claim it back from the agent. Some of the charges which estate agents have been known to charge include:
- Deposit administration fee - Some agents charge a fee to protect the deposit.
- Administration fee - Covers the cost of carrying out credit and employment reference checks and drawing up the paperwork for the tenancy agreement. In some cases agents charge a separate credit and reference check fee. Agents should not charge you more than it costs them to carry out these checks.
- Holding deposit - Some agents require a holding fee to secure a property while credit and employment reference checks are carried out. This is deducted from the first month’s rent where the agreement goes through successfully. Agents may reserve the right to deduct any costs incurred from the holding deposit where a tenant pulls out of an agreement or where the reference or credit check does not meet the agent’s or landlord’s requirements.
Make sure you understand exactly what the money is for and under what circusmtances it will be returned to you. Get receipts for any payments you make and keep a copy of any contract you sign relating to the payment of these fees. If you believe that the fee was unlawful, you can try to reclaim it using our template letter.
If you are concerned about any additional fees, ask the agent or landlord what exactly the fees cover. Speak to an adviser at Housing Rights if you think these fees are unfair and want to find out more about the law on tenancy fees.
It is essential to have full contents insurance when you’re renting privately.
Your landlord’s insurance will only cover items that the landlord has provided. If your own property is damaged or stolen and you do not have valid contents insurance you will not be able to claim for damages. Your insurance should cover the cost of replacing all your belongings. If you don’t have insurance you will not be able to get any financial assistance if your home is broken into and your property stolen or if your property is damaged due to flooding or other disasters.
Heating and utility costs
It’s easy to forget about some of the hidden costs of renting a home. As well as the obvious charges of rent and rates, you’ll be responsible for paying for all the utilities that you use in your home. It’s a good idea to work out how much these are likely to cost you before you agree to take on a tenancy.
Don’t forget to budget for your monthly heating, electricity, telephone and other utility bills. Your heating bill will vary depending on the type of heating in the property. Make sure you ask the landlord or agent about the type of heating in the property and whether you will have to prepay your bills through a meter system, or receive regular paper bills. All rental properties must have a valid Energy Performance Certificate. Have a look at the EPC when you view a property. This lets you know how energy efficient the property is and will show what steps could be taken to improve energy efficiency in the property. A lower rating will mean that the house will be more expensive to heat.
Shop around for the best deals before you commit to an internet, telephone or cable television provider. Lots of companies offer incentive deals for new members and cheap package deals if you get all your communication services from one supplier. You’ll need to read any small print though, as there may be a minimum term applied to your new contract.
If you plan on having a television in your home, you’ll need to purchase a TV licence. There are a number of payment options to make the licence more affordable.
Initial outlay costs
Moving home is an expensive time. As well as having to hand over a deposit and one month’s rent in advance you may have to buy some basics to furnish your home and could have to pay installation charges to set up all your new utilities. If you’re in receipt of certain specific benefits, you may be able to apply for a budgeting loan to help you set up home.
Paying for damages
You will be expected to pay for anything which belongs to the landlord that you, or a guest of yours, has damaged. You should report damages to the landlord as soon as they occur.