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Establishing your budget and finances

Understanding what your budget is before you start your search will give you a realistic idea of the size, location and type of property you can afford and make the search process much more efficient. When calculating your budget, there are a number of factors to consider:

Offer stage

When you have found right property you will need to secure it through making an ‘offer’.

You will be required to pay a holding deposit, which is usually the equivalent of one week's rent and which will be offset against the first rental payment if the tenancy goes ahead. You need to carefully read the terms of the holding deposit receipt before signing it. In some circumstances, you may be refunded all or part of this money if the tenancy does not go ahead, in some circumstances you will not.

Referencing for individual tenant or guarantor - Reference checks are carried out on prospective tenants to confirm that they have previously rented without any major issues. Credit checks are carried out to ensure that prospective tenants can afford the monthly rent and have no serious adverse credit problems. You may be required to provide a guarantor for the tenancy, who will also need to undergo the referencing process. At KFH we advise our landlords to use an independent specialist referencing company for this purpose. 

If the tenancy is to be an assured shorthold tenancy (AST) then the landlord will pay the cost of any referencing. Where the proposed tenancy is not going to be an AST then you may be required to pay for referencing.

For more information talk to a KFH letting agent.

Offer accepted stage

If your offer has been accepted (subject to contract and satisfactory references) then before the tenancy starts you will need to make the following payments at this stage of the process:

  • Rent – usually equivalent to one month’s rent, but as set out in the tenancy agreement. The holding deposit will be deducted from the first payment. Further rent payments will be collected via direct debit from your nominated UK bank account.
  • Security deposit – Under the Tenant Fee Act 2019, if your tenancy is an AST then there is a limit to the amount of deposit you can be required to pay. For tenancies with a rent up to £50,000 per annum this is no more than the equivalent of five weeks' rent. For tenancies over £50,000 per annum this will be no more than the equivalent of six weeks' rent. There is no restriction for tenancies which are not ASTs. This deposit is assurance to the landlord that when you move out, their rented property will be left in a good condition. If the property is not left in a state fit for purpose your landlord or letting agent may deduct your deposit if there is any damage to the rental property. For ASTs this deposit will usually be held by KFH as stakeholders and protected by a government backed Tenancy Deposit Scheme (TDS). For tenancies which are not AST then it is usual for KFH to hold this as a stakeholder, but it will not come within a tenancy deposit protection scheme. 

How to calculate your rent

  • To help calculate your monthly outgoings, have a look at this helpful budget planner

Will there be any other costs?

There may also be some other costs throughout your tenancy, including:

  • Amendments or changes to the tenancy term - Should you wish to make any changes or amendments to the terms of the agreement once the tenancy has started then, dependent upon your landlord agreeing, we will draw up an addendum to the agreement
  • Early release – If for any reason, you request your landlord to agree to ending the tenancy earlier than the end date set out in the tenancy agreement (or in line with any break clause included in the tenancy agreement) then he/she does not have to agree to this. However should your landlord agree, then he/she can ask you to reimburse him/her for any financial loss he/she might suffer as a result
  • Change of sharer - If you are sharing with more than one person, your landlord does not have to agree to you changing any of the named tenants during the tenancy term. However he or she may agree to do so subject to a reasonable charge as this involves creating a brand new tenancy.

To find out more information about KFH fees talk to your local letting agent.

Household bills

If you are unsure about bill costs once you have decided on a property, ask your letting agent, who may be able to provide you with an estimate of utility bills based on the current tenants’ utility costs.

You can also find out the council tax band and associated costs of your property by entering the postcode into KFH’s council tax information page.

Typical household bills may include:

  • Council tax
  • Energy – gas and/or electricity
  • Water
  • Telephone
  • Broadband
  • TV licence
  • Digital or satellite TV
  • Insurance for your personal possessions

It is important to always keep on top of your monthly bills, to maintain a good credit rating.

 

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