Property in London: A Few Things You Should Know About Renting

Unsurprisingly, the rental process in the United Kingdom is different from that in the United States, and there are certain key factors that you should know as a potential tenant in London. These range from the length of the lease available to how to calculate the monthly rent or how deposits work.

Types of Leases

There are a few rental (also called letting) options available in London. First, there is a short-term let, which is used for temporary housing for anything from a few weeks up to six months. These can be ideal for your fact-finding trip or as a place to land while you find longer-term accommodation. The advantage of these is that they are fully furnished and all the utility costs are included in the rent (except for telephones). Then there are long-term leases, which are taken out for at least six months, with a year or more much more likely, and will usually be an assured shorthold tenancy. These can be furnished or unfurnished, and utilities as well as local taxes are not included with the rent. If possible, you should try to get a six-month break clause in your long-term lease, which will allow you to get out of the contract before its renewal date. This is especially useful for expats who have been transferred to London, as there is always the chance that your project or role will be terminated and you will be asked to return to the United States. Also make sure you have the option to renew the lease, and agree what the annual increase will be if you do renew (based on increases in the Retail Price Index with upper and lower percentage limits). If you have a relocation agent make sure they check the lease before you sign. Or, you may want to get a solicitor to help you (there may even be someone at work you can use).

Calculating the Monthly Rent

One of the first things that you need to know about rental property in London is that the prices are usually priced by the week (such as £500pw), even though you will pay by the calendar month. Furthermore, the monthly rental is not just the weekly rent multiplied by four. Instead, the monthly rent is worked out by multiplying the weekly rent by 52 and then dividing it by 12 (for example, £500 per week × 52 weeks ÷ 12 months = £2,166.67 per month). Don't make the mistake of just multiplying the rental price per week by four - the actual price over a 12-month period will be much more.

Estate Agents and Fees

Another thing you should bear in mind concerns the realtors (called "estate agents" or "leasing negotiators"). The estate agent does not work for the potential tenant - they work for the landlord. Good ones will try to please you and the landlord; bad ones will misrepresent the situation and say nearly anything to get you to sign the lease. You should be cautious about anything that they say or agree to, and always get it in writing or include it in the lease. At the moment, estate agents aren't regulated, so they are pretty much a law unto themselves. Don't be surprised if they show you property above your budget and then promise that the landlord will take reduced offers. While there may be some room for negotiation, this will depend on the state of the rental market and cannot be relied upon.

You should expect to pay the estate agent an administration fee for process- ing your references and preparing the lease (this can be £250 or more). You may also be asked to pay for an inventory fee, which currently runs around £100 to £150 depending on the size of the property. An inventory check will happen when you check in and check out of the property. This fee covers the cost of an independent inventory clerk who will come in and make a note of the state of the property, along with all the furnishings and fittings, before you move in, and again when you leave. The idea is that the state of the property when you move out will be compared to its state when you moved in, allowing for some wear and tear. You will need to get the place professionally cleaned be- fore the checkout inventory, and be sure to fill and paint any holes you put in the walls. If you've looked after the place and any furnishings you should get your security deposit back, otherwise the landlord will keep some (or all) of the deposit to cover the costs of repair work ("redecorating"). If you can, you should be at the inventory check-in, so that you can point out any damage or problems with the property before you move in.

Holding Deposit

If you find the home of your dreams and want to secure it, then you can place what is known as a holding deposit. This deposit (usually a week or two's rent) confirms your good faith and serious commitment to renting the property. It should get the landlord and estate agent to take the property off the market while you negotiate terms and sort out the lease. You will need to hand over the holding deposit money straightaway (sometimes you can use a credit card) and sign an agreement that says that you will lose the deposit if you back out for any reason, and that the landlord will return the deposit if they pull out. Make sure you list any conditions you want included as part of the agreement, such as the amount of rent, the start date, or having the place thoroughly cleaned. Once the lease is signed, the holding deposit money can be applied to the security deposit or the first week's rent or it can be returned to the tenant.

Security Deposit

This is the deposit used as security against damage, and it is usually equal to six weeks' rent. For a long time landlords in the United Kingdom used to view the security deposit as their money regardless of the state of the property when the tenant moved out. Needless to say, getting your security deposit back used to be a nightmare. However, the rules governing security deposits have been changed, and landlords (or management agents) are now required to join a Tenancy Deposit Scheme. This scheme gives the tenant some protection from landlords who refuse to return the deposit for no good reason, and will provide dispute resolution service to help resolve any issues quickly. Within 14 days of moving in, the landlord or the management agent should tell you about your deposit and the Tenant Deposit Scheme where it is registered. Be sure to follow this up if you don't hear from them. Slowly but surely landlords are realizing that a security deposit is just that, a deposit, and must be returned if the property and its furnishings haven't been damaged.

References

Before the lease is signed, you will be asked to provide the estate agent (or landlord) with some information and references to prove that you can pay the rent and are suitable as a tenant. These will include an employer's reference, a bank statement, a passport, and a second form of ID (such as a US driver's license). You may also be asked to provide a previous landlord's reference and perhaps a recent bill. For Americans new to London these references can be difficult to pull together, as you may not have a bank account yet or a pay slip. If you own your own home in the United States, you may not be able to provide a previous landlord's reference (in which case ask if a character refer- ence will suffice). Landlords and estate agents that are used to overseas ten- ants should be a bit more understanding and make a few allowances. It is a good idea to pull together as many references as possible before you start your home search.

Increasingly, leasing agents are using referencing companies to collect and process this information, in which case there will be yet another charge for this: usually upwards of £50.

Finding the Right Place

Knowing where to start your search for a home is probably the hardest part of relocating to London. Which areas can you afford? Are they safe? What will the commute be like? What are the local schools like? Your search will be more fruitful if you can list your priorities, including cost, commute, and size. Do you need an outdoor space? What local amenities would you want? Is off-street parking a must? You will need to be realistic about what is available in your chosen neighborhood in your price bracket and be willing to compromise if necessary. If schools aren't a worry, then you can select a location based on your budget, your commute, and the neighborhood's ambiance.

From the book Moon Living Abroad in London by Karen White. Excerpted by arrangement with Avalon Travel, a member of the Perseus Books Group. Copyright © 2012. For more information, visit http://www.moon.com.