Be a financially-savvy tenant with British Insurance Guide

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The Association of Residential Letting Agents recently revealed 40% of members reported an increase in tenants’ defaulting over a six month period. Changes to Local Housing Allowances, pay cuts and job losses will cause this figure to grow, so to help safeguard tenants’ finances, online independent insurance provider British Insurance, has some advice

The Association of Residential Letting Agents recently revealed 40% of members reported an increase in tenants’ defaulting over a six month period. Changes to Local Housing Allowances, pay cuts and job losses will cause this figure to grow, so to help safeguard tenants’ finances, online independent insurance provider British Insurance, has some advice

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 your 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/furnishings at the tenancy start date.

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.

British Insurance Managing Director, Nel Mooy, comments: “According to the Government’s English Housing Survey, there were 3.4million private rental households in 09/10, up from 3.1m in 08/09. Given the Council of Mortgage Lenders says people who rent are more susceptible to debt than those with mortgages, it’s vital they have access to advice and financial safety nets.”

The CML’s rationale is that home owners have access to drawdown facilities, can refinance, borrow more or sell their property. Renters have none of these options.

Nel concludes: “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.”

To view PPI and other products visit http://www.britishinsurance.com.

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Nel Mooy

Francesca Breeze
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