It’s no fun being a buyer. Property prices may be waning – online estate agency Rightmove has just reported the third monthly drop in asking prices – but Britain’s houses are still horribly expensive.
Standard and Poor’s, the ratings agency, noted recently that the UK average house-price-to-income ratio, at 4.3 times, is still well above the long-term average of around 3.3. With public sector job cuts looming, plus the prospect of a double-dip recession, anyone buying now seems virtually guaranteed to acquire a falling asset. Meanwhile, credit is hardly flowing freely. Home loan approvals are at their lowest in 17 months and, as the FT’s Daniel Pimott notes, running at around half the pre-financial crisis average.
Little wonder many people are opting to rent. However, renters also face a big problem – as Simon Lambert on thisismoney.co.uk notes, when it comes to help and advice, compared to buyers, wannabe tenants can be left feeling like a “forgotten tribe”. So here are our six top tips to ensure that your renting experience is as hassle free as possible.
1. Check out the area properly
Moving house is a pain. And by the time you’ve paid agent’s fees and moving costs, it can be expensive too. So try and reduce your number of potential rental moves by acting like a buyer.
That means carefully researching the area, checking out transport, local shops and – if you have a young family, or plan to – schools. Then, once you’ve identified a property you’d like to rent, why not speak to a neighbour? Just knock on the door and ask for their view on the area’s pros and cons. You’ve got nothing to lose after all – if you get a rude response, that’s a warning sign in itself. More likely you’ll find out what an area is really like to live in first hand.
For example, I had a narrow escape a few years back when I thought I had found a delightfully quiet house on a narrow lane in the middle of a town. However what I didn’t know until I asked was that a pub with a late licence, tucked way around the corner, made earplugs all but compulsory on a Friday and Saturday night.
2. View like a buyer
It’s tempting, once you’ve seen a few properties and are losing the will to continue looking, to just plump for anything. Don’t. Take your time – after all, with more and more property owners struggling to sell, some are choosing to rent out either a whole flat/house or maybe part of it. So, you should have a decent choice of properties.
Once you get inside the front door, act like a buyer. Carefully check the central heating, appliances (is there a dish washer?), the bathroom (does the shower actually work?) and any outside space (do you get parking?). The best bet is to make a checklist of questions before you go so you don’t get bamboozled by any slick agent or landlord patter when you look around.
3. Haggle
We’ve all done it on holiday – negotiated the price of some dodgy souvenir. Potential tenants should do the same. Turn up at any viewing punctually, look smart, smile lots, praise the property – and then ask about a discount.
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You can up your chances by offering to sign a longer lease. Getting new tenants is a hassle for any landlord, so if you look like a good bet and are prepared to stay for a while, you should be able to knock something off the advertised price. Remember: ‘voids’ (empty periods) are the mortal enemy of the buy-to-let landlord, so it’s worth a smart landlord’s while to knock a bit of money off if it’ll get you in the door that bit quicker. Even £10-£20 a month is well worth a few minutes to negotiate.
4. Check fees up front
Lettings agents’ fees can vary hugely depending on whether the agent works for a small independent firm or a big estate agency. So find out how much you will be paying in advance. Ask for a breakdown of costs and specifically what you will pay for reference checks and any credit checking.
5. Ask for, and check, an inventory
Given half a chance, a dodgy landlord will attempt to charge you for the smallest damage to their property, whether or not you caused it. So make sure you get a full inventory of what is included in the rental and then check it line by line. Make a note there and then of any damage just as you would when, say, hiring a car. Also be absolutely sure what your final obligations are – for example, if you are expected to have the curtains cleaned at the end of the tenancy, check the same has been done for you before you get the keys.
In England and Wales, landlords are now required to use one of three approved tenancy deposit protection schemes, designed to stop a landlord from keeping or deducting costs from a deposit unfairly. So it’s worth asking which one they have signed up to. Also note that they can still withhold money from you at the end of an agreement to cover damages (the scheme protects the deposit while any dispute is resolved) and the scheme is not compulsory in certain circumstances (such as a landlord sharing a property with you as a tenant). See DirectGov for more on this.
6. Beware rent-to-buy schemes
“A disaster waiting to happen” is how David Lawrenson of Lettingfocus.com describes the lease options being marketed at first-time buyers. Offered typically by property investment clubs, these give tenants the right to buy a property at a set price at an agreed future date. An upfront deposit of 2-3% of the purchase price is paid by the tenant, followed by a monthly payment to cover the rent plus some contribution towards the cost of the property. This is supposed to be the perfect solution for buyers with neither a deposit nor access to home loan finance.
It’s anything but. As Lawrenson tells the Financial Times, these schemes are “riddled with pitfalls”. For example the initial deposit and all subsequent payments are usually non-refundable. And an option to buy at a fixed price is only of use if property prices rise beyond that price. Worse, fail to keep up the scheme payments and you could be evicted, leaving you without a roof over your head. In short, “the danger is that the tenant turned possible buyer has no real security at all over the property”.
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