By Rune, Danish-born entrepreneur and a co-founder of Fantastic Services
Living is expensive, especially if you don’t own your own place. Unfortunately, for 33% of all Brits, that’s precisely the case, as only 67% of the people in the United Kingdom own the place they live in. When we talk strictly about London, the statistics are even more frightening, as nearly half of all Londoners live on someone else’s property.
The worst part, however, is not the rental payment each month or week but the accumulative charges you must pay on top. So let’s have a look at all the hidden costs you will have to take care of before, during, and after you rent a home.
Payment Before Moving In
If you think you will start paying only when you are already in your new rental place, you are terribly wrong. Often the initial investment in becoming a tenant is the biggest obstacle in finding a suitable rental apartment. While in 2019, the Tenant Fee Act put a stop to the relentless charging of tenants, the initial investment in getting a rental is relatively high. Since 2019 all administration fees, including application fees, are taken care of by the landlord, who can not charge you for them. Naturally, this will be calculated in your rent, so you will still pay, just not upfront.
Furthermore, before 2019 one could easily hear horror stories about costly deposits. Since this fateful date, however, deposits have been capped at a maximum equal to 5 weeks of rent. A notable exception was made for properties leased for more than £50,000 yearly. In these cases, Landlords may ask for up to six weeks of rent as a deposit. Still, the average monthly rent in the UK is £1,113, with the Greater London region and South East driving the average much higher. For example, the average monthly rate without London is only £830. Still, a Londoner may be expected to pay a deposit worth nearly £2,400. If we include the 1-week rent landlords can charge as a holding deposit, the initial fee comes closer to £3,000.
That’s, however, far from all your initial expenses. Landlords can no longer force you to pay for insurance and inventory checks. However, it’s in your own interest to include these things in your pre-rental expenses, as they are a good idea to have. Property insurance will cost you around £150 annually, and the inventory check will cost you another 100 + VAT if you get a studio. Any additional room will cost you 20 pounds on top.
Finally, you will have some expenses with the entire moving process. Getting your furniture and belongings may add some additional costs if you don’t want to stress too much about it and hire a removals company. Living in a hotel and storing your belongings in a storage house may also be considered additional expenses, although not everyone has them.
So, even before you get to your new home, you will have to pay between £3500 and £5000 on average. Considering that the average salary in the UK is about £2000 monthly before taxes, getting a new rental apartment might cost you up to 3 salaries if you want to afford it.
Is there a Differences Between “per week” and “per month” rental rates
As we speak about rent, we need to address that you can be charged either weekly or monthly. There is practically no difference in the rate you will be paying. Actually, weekly payments are usually associated with renting just a room, as tenants with such arrangements change much more often. Still, if you want to make sure you have to choose how often to be charged the rent, we suggest going for the monthly option, as this way, you will only have to make 12 instalments in a year and not 52. If you want to make sure that both options give you precisely the same rental rate, don’t multiply the weekly rent by four since the month has more than 28 days (except February 3 out of 4 years). Instead, multiply the weekly rent by 52 (the number of weeks in a year) and divide it by 12. Still, don’t expect any rate differences.
Pet Deposit and Fee
What may lead to increased fees, however, is having a pet. Firstly you should ensure that the place you are looking to rent allows pets. This usually is stated very clearly, and if not, just ask. Do NOT sign with a landlord, if you are not absolutely sure, you can take your pet with you. This should also be stated in your contract, so be aware.
Needless to say, this most certainly will be another additional fee to your rent. In Wales, Northern Ireland, and Scotland, property owners may ask for an extra “Pet deposit”, which covers any damages the pet may cause to the property. Naturally, this deposit is refundable at the end of the tenancy if there is no damage to the rental space.
In England, however, landlords are forbidden to ask for an extra deposit, so instead, they may ask for additional rent.
Utilities and Internet.
One thing you need to consider when choosing a rental is all the additional fees you will have to cover. This includes not only utilities, which sadly have risen by nearly 100% in the last year, but also parking, commuting, Internet, TV and others. The best option is the so-called all-inclusive rent, which covers your bills to an extent. If you go above the agreed-upon limit, you will pay only the difference.
Still, you need to keep in mind that living in the UK is by no means cheap. In 2022 the average cost of living is 2,005 pounds a month for a single person and £3,037 for a household. This makes the UK the 19th most expensive country in the world. From the £2,005, about 7% go for utilities, 41% will be spent on the rent itself, 29% on food, 14% on entertainment, 5% on commuting, and 4% on clothing. So more than half of your monthly expenses will be directly attributed to your renting space. Still, you can save some money on commuting and utilities if you make an extra effort to be energy efficient. However, you will still have to pay about 12 percent of your monthly budget on these two factors (considering you are earning a slightly above-average payment.
While maintaining the property is mostly the landlord’s job, sometimes you might be charged additional fees based on your behaviour. For example, if there is a pest problem, the landlord should take care of it. Before discussing it with the property owner, you should not pay out of pocket. However, if the owner can prove that the pest infestation was due to your negligence, you will be charged the full price of the pest control. Moreover, while the landlord will cover maintenance repairs that you did not cause, they are not responsible for your relocation. You will have to pay for your own stay at a hotel or a different rental space. This may add up to your monthly payment quite fast.
Depending on the contract you’ve signed, you might be responsible for keeping the yard intact, which is also an additional fee. However, the most significant expense you will have to take care of is the end-of-tenancy cleaning. Note that landlords can’t force you to hire a professional crew to clean before you leave, but they can ask that the property be cleaned to a professional standard. Failure to do so will cost a part of your deposit, which, as you already know, is several thousand pounds.
According to a data analysis conducted by one of the biggest names in the end-of-tenancy cleaning industry, Fantastic Services, cleaning a one-bedroom apartment will cost you between 180 and 210 pounds, depending on the location. In contrast, if you don’t reach the professional standard the landlord expects, they might charge you a significant per cent of your security deposit. A professional cleaning crew will guarantee your deposit back, so it’s well worth hiring professionals.
Being a renter ain’t cheap
As it’s become evident, renting a home is not that cheap, and the initial fees are anywhere between 4 and 6 thousand pounds. Moreover, you are losing money without gaining anything in return. In that case, you might think about a mortgage. At least when you pay, you will get a tiny piece of property instead of throwing your money at a landlord.