Now that your property is ready, you've got all your safety certificates in place and you've created an inventory it's nearly time to start looking for a tenant. But before you do you will need to decide how much rent you are going to charge and whether you want your tenant to pay a deposit.
How much rent should I charge?
If you are using a letting agent you can ask them for advice. If not you could check local newspapers and letting agents to find out how rent is charged for similar properties. You should think about:
- Your mortgage payments
- Possible overheads
- Furniture or services you are providing
- The type of people you want as tenants
- Value for money
Be realistic about the rent as you don’t want to price yourself out of the market. Once you have decided make sure you include it in the Tenancy Agreement. You also need to include details of how often the rent will be reviewed and the process for increasing it.
Do I need a deposit
Most private landlords will ask for a deposit to protect against losses if the tenant doesn’t pay the rent, the property is damaged or something goes missing.
Deposits should be paid at the start of the tenancy. You should give your tenant a receipt and keep a copy yourself.
You must include the following information in your Tenancy Agreement:
- The amount of deposit paid
- Where it has been protected
- When money can be taken out of the deposit
- When you will pay back the deposit
Rent Deposit Schemes
Some people can't afford a deposit but they could be good tenants. If your prospective tenant doesn't have the money for a deposit you could consider a Rent Deposit Scheme. The schemes, which are often only available to people from certain vulnerable groups, usually replace cash deposits with a guarantee to cover rent arrears, damage to the property or missing items. They provide:
- A virtual deposit against damage or rent arrears;
- A reference check and tenants affordability check;
- Tenant support to avoid problems;
- General advice on landlord and tenant matters.
Newcastle City Council offers a Rent Deposit Scheme.
If you take a deposit from your tenant the law says that you must protect it in a government authorized Tenancy Deposit Protection Scheme.
You must do this within 30 days and give your tenant proof that you have protected their money.
It is an offence not to protect our tenants deposit in an approved scheme within the time specified.
Alternative Dispute Resolution
At the end of the tenancy you will need to return the deposit to the tenant less any deductions for costs you have incurred.
If you need to make deductions to the deposit and the tenant disagrees the deposit protection scheme will provide a free Alternative Dispute Resolution service to help you reach an agreement.