What Fees are Associated With Renting in the UK?
Frequently Asked Questions: Fees Associated With Renting in the UK?
What are Referencing Fees in the UK?
Referencing fees are any charges to a tenant for completing references (eg. a credit check). As of 1 June 2019, the Tenant Fees Act went into effect, banning landlords from charging future referencing fees. Previously, it was commonplace for landlords to charge up to hundreds of pounds in referencing fees. Now, landlords and letting agents must pay the full cost of referencing including running a credit check on tenants. It is, however, acceptable for a landlord to ask you to provide references. This usually comes in the form of contact information of previous landlords that you have rented from.
If a private renting sector landlord is trying to charge you referencing fees, they are breaking the law. Be on the lookout for scams! Landlords are able to take money from you before you’ve moved in but only for certain items.
What is a Holding Deposit?
A refundable holding deposit is an amount paid to hold a property in your name while the landlord completes referencing. As of 1 June 2019, the Tenant Fees Act caps the amount that a landlord can charge for a holding deposit at no more than one week’s rent. It is possible that you may lose some or all of your holding deposit if you fail to pass referencing so be mindful of how much you pay alongside your likelihood of gaining approval on a credit check.
A landlord is not required to return your holding deposit if:
- You do not end up moving in to the property
- You provide false reference information (such as false income amount)
- You fail to provide accurate reference information within 15 days
What is a Tenancy Deposit?
A tenancy deposit is an amount paid at the beginning of a lease that the landlord will hold on to until you move out. The amount a landlord can legally charge is capped at 5 weeks’ rent (or 6 weeks’ if your annual rent costs exceed £50,000). Tenancy deposit is designed as a sort of insurance policy for the landlord in the event that you damage the property or fail to pay the rent. If you return the property in good condition and pay all rent on time, you should receive 100% of the deposit back.
If you believe you have been charged more than the legal amount for a deposit, contact Citizens’ Advice.
Can I Be Asked to Pay for Rent in Advance?
If you fail to pass a credit check or referencing check, you can offer to pay multiple months rent in advance to a landlord to try to prove that you are a trustworthy tenant; however, a landlord cannot legally demand that you pay rent in advance under UK law. It’s important to read lease agreements thoroughly before signing them to make sure you do not get taken advantage of.
What are Contract Renewal or Modification Fees?
Contract renewal or modification fees refer to fees that are charged by Letting Agents when you make the decision to renew or extend your lease. The fees usually range between 50% and 100% of the original commission that was charged when you originally signed the lease. As of 1 June 2019, the Tenant Fees Act effectively bans the use of contract renewal or modification fees in the UK.
Credit Building to Pass Landlord Reference Checks
It’s commonplace for landlords to run a traditional credit check while holding on to your holding deposit when deciding whether to rent a property to you or not. The best way to ensure you will get approved is to work on growing your credit score. Learn how Pave is helping a community of 300,000+ members properly build their credit score with all three main credit reference agencies in the UK!
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Our mission at Pave is to eliminate financial inequality and give people a fair chance to go as far as they can. We do this by offering the proper path to good credit. Pave has been voted the best credit building product in 2021 by customers in the consumer credit awards and was voted the best new personal finance app 2021 by moneynet.