Financial Check List for Tenants
Moving out of home for the first time can be a little daunting. You think ‘I earn £850 per month now, and rent is only £450, so I can afford to rent easily,’ but you won’t necessarily know what other costs are involved in a) the moving out process, or b) the monthly outgoings.
Additionally, you won’t necessarily know what aspects of a property to look out for, or what you need to do before signing up to a fixed term agreement, in order to keep yourself financially protected. Here are my top tips, learned from moving out of home a year and a half ago, and now looking to move into a bigger property.
The Cost of Finding your New Home
Whichever website you look on, or whichever property lettings agent you visit on the high street, to find your new rental property, these are the following factors you need to include in your calculations as to whether you can afford to sign the rental agreement:
1) Fees – different agencies will charge different fees. I’ve come across one agency today who charge £150 per person moving in to the property. So between 2 of you that’s an extra £300, and if the worst should happen and you don’t pass the credit check, or if you decide against the property for some reason, you won’t be able to get this money back. As well as paying for the credit check, this fee also ‘reserves the property’ for you, so that whilst your checks are being processed, they can’t offer your chosen property to another potential tenant. Sometime fees can cost as little as £50 per applicant, or in rare circumstances (often on a property which has been available for a little while) an agent may offer no-fees as a special promotion. Another thing to bear in mind is that when you are moving properties for the second time, you will probably have to pay these fees again for your new property, even if you remain with the same rental agent!
2) Deposit – the deposit for a rental property is usually either one month’s or one and a half month’s rent. This should be paid on the first date of your tenancy (plus your first month’s rent), and will be paid into a safety deposit scheme and if the property is deemed to be in as good condition when you leave as it was when you moved in, you should be given your deposit back in full. If any cleaning or maintenance is required after you move out, your landlord is likely to use some or all of your deposit to cover these costs. Something else to bear in mind is that even if you are to be given your deposit back in full, you won’t receive this until after the date you will need to pay deposit on your next property – so before you move for the next time you’ll need to have ensured you have access to an additional deposit! N.B. Make sure you use the inventory given to you by your agent and go around the home doing your own thorough check, even taking photos of any existing damage and submitting them with the inventory back to the agent for signing. This will protect you from being charged for any damages which you didn’t cause!
3) Furniture and Appliances – now, I wasn’t put off by thoughts of furnishing my home when I moved out, I thought we’d gradually add chairs and tables etc and that we would be happy to get by without for a short while. What’s more, I made a facebook status asking for sofas and people I hadn’t heard from in years offered sofas for free, and a washing machine. So that helped! There was of course some stuff that wasn’t available for free from others, or that you wouldn’t necessarily like 2nd hand (like toilet brushes or tea towels!) That being said, we did need some essentials, and you can’t hide from the fact that even buying some crockery, cutlery, washing up liquid and cloths, toaster, kettle, glasses, pans and cooking tools etc all does add up even if you wander around somewhere really value for money like Tesco or Wilkinson. I would budget between another £100 or £200 for essential cooking and cleaning, if you’re spending sensibly.
The Cost of Running your New Home
Once you have worked out whether you can afford the up-front expenditure of moving out, without it having an unmanageable impact on your finances once you’ve moved in, you need to consider the ongoing monthly costs and whether you’ll be able to meet them. Remember to be realistic about estimated costs, it’s no use saying ‘I’ll just use less water’ or ‘I won’t put the heating on’, as you won’t really know whether you’re overspending at the time, and once you’re freezing, the reality is you won’t care about the bills and you’ll stick the heating straight on!
The most common things to budget for are:
1) Council tax – depending on the size of the property you will owe a varying amount of council tax. For smaller properties this is normally around the £1150 figure for the year, but your lettings agent should be able to tell you which ‘band’ the property is in, so then you can find out for sure how much you will owe. This can be broken down in to either 12 monthly instalments or 10 monthly instalments, so make sure to budget approx. £100 per month for this. Please make sure to check with your local Council as the cost of council tax in Northamptonshire may vary quite significantly from somewhere like Cambridgeshire, for instance.
2) Utilities – water, gas and electric are important expenses to budget for. Whilst some companies will offer quarterly bills payments, some will offer monthly payments. It is important to estimate how much you are likely to be charged. One way to do this is to speak to neighbours or friends and families in similar sized properties and ask how much they spend each month. Another sensible idea is to use MoneySavingExpert’s Energy club to ensure you’re getting the best deal. If you’re going to be charged quarterly, it is important to budget each month to save up the monthly amount it’s costing you for energy or water, so that by the time the bill is due to be paid, you have enough money to cover the payments, without having to pay it all out from the current month’s income (probably leaving you short for essential food and travel costs!)
3) TV Licence & Sky – whether you opt for the free channels for which you’ll still need a TV licence, which is £37 every 3 months, or a Sky or BT package which will usually be paid monthly – just make sure that before you sign up to a service you have budgeted the monthly payments for it.
4) Travel – items such as car insurance, petrol, MOT’s and road tax, or bus fares to work etc should all be written down as part of your monthly budget, as these are essential items, especially if you rely on these forms of transport to get to work.
5) Food – it’s important to try and plan realistically how much you spend on food during a month. I always plan to spend only £100 (or £200 between me and my boyfriend). Some weeks this seems easy to accomplish during the weekly shop, whilst some weeks we will have friends round and spend nearly the weekly budget just on one meal entertaining! Also, eating out is fun, but again uses up my weekly food budget. I’m not saying don’t eat out, just make sure to budget for it!
6) Of course, don’t forget to budget in any other payments which you may already be signed up to, or instance credit card minimum monthly repayments, any holidays you’ve paid a deposit for and the balance is outstanding, any loans you may need to make monthly repayments on, any birthday presents or Christmas presents you plan to buy.
You may well be able to afford all of these things easily, but once you have an additional £400 or £500 per month coming out for bills, it’s important to try to budget your finances each month so that you don’t find yourself short at any point.
Best of luck with your choice of property and decisions about moving out – as long as you plan well, you’ll find it the most liberating and enjoyable experience! As well as a big eye opener about how to clean, cook, do DIY, and make a house in to a home. It’s such fun!
Bio: Hannah remembers well the difficulties she faced moving in to her first rental property, yet she is now the owner of a rental property herself. Using the expertise of a Northamptonshire Lettings Agent she has enjoyed running her property as a rental home.
Category: Apartment Rental
