This is the view of Nel Mooy, Managing Director of Payment Protection Insurer, British Insurance, who is calling for renters to also be given prudent advice.
According to the Government’s English Housing Survey, there were 3.1million private rental households in 08/09, up from 2.7million in 07. Those privately renting or in socially rented accommodation now account for 32% of UK households and this is set to increase as demand for properties continues to outstrip supply.
The Association of Residential Lettings Agents reports that in Q1 this year, 59% of members had more tenants than properties available, up from 50% in Q4 09 and 24% in Q3.
Figures from money charity, Credit Action, appear to confirm renters are struggling financially. It predicts that for every day in July, some 363 landlord possession claims and 238 landlord possession orders will be made, compared to 203 mortgage possession claims and 158 mortgage possession orders.
In the absence of what it sees as prudent advice for renters, British Insurance has put together the following guidelines;
1. Don’t pay over the odds - before committing to renting a property, visit letting agents to ascertain what rents are being asked for in the local area.
2. Financial audit – assess income v proposed expenditure before signing on the dotted line and don’t forget to take into account all outgoings such as utility bills, council tax costs and even the weekly food shop.
3.Build up a deposit – it’s common for landlords to ask for a deposit that equates to between four and six weeks rent, so save for this first and ensure it’s paid into a Tenancy Deposit Protection Scheme (introduced in 2007, as part of the Housing Act).
4. Check what type of tenancy you’re going into - assured short-holds are common- and whether it’s furnished or unfurnished, it could have a huge impact on your finances.
5. Legal obligations – it’s mandatory for landlords to provide a Tenancy Agreement, Tenancy Deposit Protection and an Energy Performance Certificate. The property must also adhere to gas, electrical and fire safety standards. An energy-deficient property will not only lead to sky-high utility bills, but it could be life-threatening.
6. Scrutinise the Tenancy Agreement - ensure you know what the deposit covers and what the terms and conditions for returning it are. Never sign anything you don’t understand and seek advice if needs be. Confirm important issues in writing and keep a copy.
7. Rent - see if you can agree the date the rent will be paid and whether there’s a formal notification for a rent increase. Ask for a rent book and ensure it details a single or joint liability.
8.Rent arrears – find out what’s in place to deal with rent arrears, get in writing details of the alternatives to repossession and know who to turn to if you do fall behind with payments. Your landlord should be the first port of call and the Direct Gov website details organisations that can help, such as Housing Advice Centres, the Citizens Advice Bureau, Shelter and National Debtline. If you do get into financial difficulties, it’s worth checking whether eligibility for Housing and/or Council Tax Benefit, plus Tax Credits.
9. Inventories – ensure you have one so you and the landlord are fully aware of the state of the property and its fixtures/fittings/
10. Insurance – tenants are responsible for insuring their possessions. Whilst it’s easy to skip contents cover, if anything happens to your belongings, you’ll be out of pocket. Never buy cover from your landlord – it’s illegal unless he/she has approval from the Financial Services Authority. Also check out whether you’re eligible to purchase Payment Protection Insurance – it allows you to continue paying your rent and wider household bills in the event of accident, sickness or unemployment, for up to a year.
Nel comments: “Last year the Council of Mortgage Lenders advised that people who rent are more susceptible to debt than those with mortgages. Its rationale was that borrowers who succumb to financial difficulties have access to drawdown facilities, can refinance, borrow more or sell their property. Renters have none of these options.
“Renters need advice and financial safety nets just as much as those buying their properties. I’m hopeful these guidelines will encourage renters to closely scrutinise their Agreements and finances, plus put in place contingency plans to ensure bills can still be paid when a salary goes. This could then impact on the high landlord possession claim and order figures.”
A PPI Consumer Guide can be viewed at www.britishinsurance.com
Note to Editors
British Insurance is a widely-recognised consumer champion and one of the UK’s leading independent providers of Payment Protection Insurance.
British Insurance is a trading name of Towergate Underwriting Group Limited who are authorised and regulated by the Financial Services Authority.
Media Enquiries
Nel Mooy, Managing Director, British Insurance, T: 01206 773636, M: 07967 698573 E: Nel.Mooy@towergate.co.uk
Francesca Breeze, Freelance Journalist/PR Consultant, T: 01273 421115, M: 07710 963838 or E: Francesca.breeze1@
