Renting for the first time, or moving from one rental property to another, can be exciting and daunting all at the same time.
Of course you need to start with some of the basics, like where location wise you want to live, whether you’d like a furnished or unfurnished property and how many bedrooms you need, but once you’ve done that you can start your search for the perfect flat/apartment or house at a price that you can afford.
That’s the exciting bit. The daunting bit is where to start with everything from documents to deposits and what you should expect from the landlord.
We recently blogged about the ID and documents that you need to provide before you can start your renting journey. Here’s a quick recap… https://johnshepherd.com/what-to-check-before-renting-a-flat-part-one-documents/)
In this blog, part two, we take a look at deposits – what, why and how much?
What is a deposit in the context of renting a property?
On 1 June 2019, the Tenant Fees Act came into force, to effectively stop landlords and letting agents from charging tenants unless the payment is allowed under what are called permitted payments.
A deposit, whether it be a holding deposit or a security deposit (more on that below), is a type of permitted payment.
It is important to note here that the Tenant Fees Act is designed to protect you and so you should not get any nasty surprises when it comes to permitted payments.
Why do you need to pay it?
Holding and security deposits act as a safety net for landlords, both at the outset of and during the tenancy, particularly in the case of any unpaid rent or damage to the property.
You may also be required to make other permitted payments during the tenancy, such as if you want to make any changes to the tenancy agreement or lose your keys or interest on the late payment of rent.
How much will you need to pay before your tenancy starts?
- Holding deposits (also known as reservation fees) are capped at (meaning you will pay no more than) the equivalent of one weeks’ rent.
So, for example, if the rent is £500 per calendar month (pcm), a weeks’ rent would be approximately £115
- Security deposits are capped at five weeks’ rent (or six weeks’ rent if the annual rent is more than £50,000)
So, for example, if the rent is £500 pcm, five weeks’ rent would be approximately £575
What does a landlord do with my money?
The landlord must put your security deposit in a government-approved tenancy deposit protection scheme (a ‘TDP’), which means you are protected from the outset and at the end of your tenancy if you have a dispute. Please note the landlord doesn’t have to do the same with your holding deposit.
Watch this space for our next blog on no deposit renting (the welcome ‘Reposit’), but if you can’t wait that long, check out this page on our website: https://johnshepherd.com/lettings/tenants/no-deposit-property-rent/