Are you worried about the costs of moving into a new rental property.
Moving from one rental property to another is a tricky juggling act. Handing in notices to your landlord whilst simultaneously referencing for your new place. And one of the trickiest elements is the deposit.
Moving from one rental property to another is a tricky juggling act. Handing in notices to your landlord whilst simultaneously referencing for your new place. And one of the trickiest elements is the deposit.
It is a typical 'chicken and egg' situation; you must move out of a property to recover the deposit for that property. But you can only get the keys to a new property when you pay a deposit. The majority of tenants in the UK do not have thousands of pounds in savings to cover the overlap. So what are you supposed to do?
When you decide to move, you need to consider the costs involved because moving house is expensive, whichever way you look at it. There is much to consider. From holding deposits, first rent payments, tenancy deposits, removal costs, and perhaps even new furniture or decorating you might need for the new property.
But how can you possibly budget when you don't know the full extent of the costs involved? This article will help shed light on this mystery so you can prepare and budget effectively for your new home.
The common misconception is that tenancy deposits are given to the landlord or agent, never to be seen again. This is totally untrue. In fact, when you pay your tenancy deposit, it is held by either a custodial service (meaning that the cash is actually paid into this account) or else it is covered by an insurance policy.
Whilst that should give you the peace of mind that, providing you look after the property well, you will receive your deposit money back when you vacate, it doesn't remove the need to actually pay it.
A few years ago, the government removed the charges to tenants for referencing, so you will not have to pay this; however, for a property to be held for you whilst you are being referenced, you will need to pay a holding deposit.
So, what are the costs involved, and how can you calculate the amounts?
Holding fee - The holding fee is payable to hold the property, suspending any other viewings whilst you are being referenced. The agent or landlord may retain this money if you are dishonest with some of your answers before the references go ahead or if something is uncovered in your profile that you did not disclose beforehand. However, if your application is successful, this amount will make up a portion of your first month's rent payment and is calculated as 1 week's worth of rent. You can calculate the amount by multiplying the monthly rent amount by 12 (to get the annual amount payable), then dividing by 52 to get the weekly amount of rent.
Rent - When the tenancy begins, the rent will become due. This may be the advertised amount, less the holding deposit you've already paid. But, if you are looking to change the rent payment date, this could be an irregular amount. The agent can clarify the exact amount based on the date you wish to change the rent payment date.
Deposit - the tenancy deposit is payable when the tenancy starts and is capped at 5 weeks' worth of rent. If we take the earlier calculation - the calendar month rent amount multiplied by 12 and then divided by 52 - you can multiply that weekly rent amount by 5 to get the maximum amount of deposit that you will need to pay to rent any particular property.
Beyond these figures, you may need to factor in removal costs or transport to your new property, but the fixed costs you must pay are stated above.
If you're considering moving to a new rented property and are wondering what is available, contact us to be notified when a new property comes to the market.