Initial Expenses Of Renting A Property

What is a deposit?

A deposit is an amount of money that you pay to the letting agent, or directly to the landlord prior to starting your tenancy agreement. The deposit is usually four to six weeks of the rent that you owe, and the deposit is a assurance that you will look after the property, and if you don't, you will lose your deposit at the end of the agreement.

What is the Tenancy Deposit Scheme?

The 'Tenancy Deposit Scheme' is a scheme that means it's not up to the landlord or the letting agent how much of your deposit on the rental property you will get back. Nor is it up to the tenant. There is a third party who decides, if there are any disputes, what amount is paid back to the tenant and what is kept for the landlord.

Why do I need to pay a deposit?

You need to pay a deposit for two reasons. Firstly, so that if you trash the place at all, the deposit means there is money left for the landlord to be able to put things right. The deposit also is a good incentive for you to keep the property in good order so that you get your money back at the end of the tenancy agreement. The second reason for a deposit is that during the tenancy, if you default or don't pay your rent at any point in time, there is some money there that can compensate the landlord once you've left.

What is a 'premium' or 'key money'?

Premium or key money is actually a legal concept. What that refers to is you have to pay an amount of money to a landlord or a leasing agent to look around properties for you. And you don't do that. You might, once, you find a property, pay a finder's fee or administration charge to take it over. But you should never pay for example to register to go look for properties. And that's what key money refers to.

How much rent do I have to pay in advance and why?

The amount of rent that you pay in advance is normally four to six weeks. The reason that you have to pay in advance is that if you paid in arrears you'd be living in the property rent free for a month, which wouldn't be free to the landlord. After that also, if you don't pay your money on day one for the next 3 days, for example, the landlord has four weeks notice that there is a problem and therefore has some time to sort it out or indeed start legal proceedings against you.