Moving home is said to be one of the most stressful things someone can do. Finding a new home, however, now that's a lot of fun. There's no need to organise removals or lug furniture up three flights of stairs yourself. It's just pure excitement as you fall in love with your dream pad.
After you've had an offer accepted — but before you move into your new place — you need to go through the process of securing your home-to-be. It also means paying for some things up front, which can cause confusion for renters.
So, if you're wondering what you need to pay for before renting a home, this guide is for you. We've answered the key questions surrounding your finances before moving in so that you can get everything ready hassle-free.
New rules mean fewer upfront payments
There's some good news to start things off. Even though you need to pay for some stuff up front, you won't find yourself out of pocket. That's because the tenant fee ban in 2019 means that letting agents can no longer charge admin fees for their services.
Previously, renters were required to pay hundreds of pounds to rent a home. Nowadays, it's entirely free, and you can move into your snazzy new apartment without it costing an arm and a leg. Good times.
But what about the things you do need to pay for?
What do I need to pay for?
Before moving into your new home, you'll be required to relinquish some money upfront. However, it's not money that you lose per se. It either contributes to rent or is part of a deposit, which you should get back.
The holding deposit secures the property and shows that you're serious about moving into your new digs. It typically amounts to one week's worth of rent and, once paid, means the person advertising the home needs to remove it from the market.
While one week's rent might sound like a lot, the figure is deducted from your first month's rent if you successfully move in. You will also be entitled to a full refund of the holding deposit if you don't move in because the landlord had a change of heart or you don't pass credit checks and referencing.
The security deposit is the amount you pay to the landlord before moving into the property. The maximum amount a landlord can charge is up to five week's rent, and they must return it to you at the end of the tenancy.
The security deposit acts as a guarantee for the landlord just in case you're at fault for any damage while living in the property. The deposit is held in an official scheme, and the landlord has to notify you which scheme they choose.
If there are any disputes between yourself and the landlord, the official security deposit scheme mediates and makes a final decision over who is liable for any possible damages. Treat the property well while you live there, however, you will get the full amount back.
First month's rent
The first month's rent is the last financial requirement before you get the keys to your new home. It will likely be minus the holding deposit, so you can expect to pay around three week's worth depending on the date you move in.
The figure that you pay each month will be set out in the Assured Shorthold Tenancy (AST). How you pay it is dependent on the agreement with the landlord or property management company, but most payments are through BACS and paid online.
Is there a way to minimise costs?
The tenant fee ban reduced costs for renters significantly. Yet, the security deposit can be more of a burden on your pocket when moving home. Five week's rent on a £300 per week property equates to £1,500, which is a lot to fork out even if you do get it back at the end of the tenancy.
Zero deposit and zero-fee renting is one way that renters can move into a new home without paying a security deposit. Many Build-to-Rent operators offer deposit-free renting in their properties, and a growing number of landlords are using the scheme too.
You can learn more about zero deposits here, but the crux of it sees you paying one week's worth of rent (non-refundable) instead of five. The result is access to more funds, which can be used to spend on essential items like that foosball table for your new flat.
Getting all your rental ducks in order
Now that you know everything you need to pay before moving in, you can find your next home with total confidence. Renters are no longer required to pay significant fees to agents, which makes the rental landscape that much more enjoyable to navigate.