Rent is among the most frustrating expenses for would-be first-time buyers,
requiring them to spend hundreds of pounds a month paying off their
landlords' mortgages, while struggling to save the deposit for a home of
their own.
But there are ways that private tenants can negotiate lower rent and start
saving more towards their first home.
Know your market
Do you know how much your rented flat is really worth in today's market? By
checking out lettings agents' shop windows or doing a simple search for
comparable properties on lettings websites, such as gumtree.com or
moveflat.com, you can establish whether you are overpaying. This could
provide a solid platform on which to build negotiations for cheaper rent.
State how good a tenant you are
Matt Pilkington, a caseworker at the housing charity Shelter (shelter.org.uk),
specialises in advising clients who rent privately and says: “What all
landlords want is consistent, decent, quiet tenants. Remind your landlord
how you fit the bill and highlight the advantages of keeping you. Tell him
how much you can pay and take it from there.”
Mr Pilkington also suggests speaking to landlords in their language during
negotiations. For example, you could argue that extending your tenancy,
hopefully on a lower rent, will save the landlord from potential “void
periods” in which the property is empty and not generating income.
Get time on your side
Most renters in the private sector are under what are known as “assured
shorthold tenancy” agreements. Typically, these stipulate a term of six
months or a year. Finding good tenants takes up landlords' time and money,
with credit and reference checks needed, and fees to be paid to lettings
agencies. Tenants who sign longer-term agreements - for example, two years
or more - negate these inconveniences and costs for the landlord, who might
then be inclined to reward loyal tenants with a rent discount of between 5
per cent and 10 per cent, if they ask for it.
Work for your discount
Toby Harris, a 32-year-old sound engineer from Hackney, East London, managed
to get 20 per cent knocked off the cost of his last rented flat. He says:
“The garden was overgrown, so my flatmate and I agreed to clear it up and
continue to maintain it in exchange for cheaper rent.”
If your flat does not come with a garden, you could offer to paint rooms or
sand floors in exchange for reduced rent.
Another way for tenants to secure a better deal is by taking a new flat
unfurnished. Of course, this will demand some initial outlay of extra cash
to buy furnishings, but in the long term you will be building these up for
your first home.
Be a better negotiator
Phoenix Training & Development (phoenix-training.co.uk) specialises in
training people to be better negotiators. Bill Osmond, the managing
director, offers some golden rules that hold true in any negotiation. “While
negotiation is essentially adversarial, adopting a 'win-win' approach helps
to bring it to a satisfactory conclusion,” he says.
In a rent negotiation, this could mean reminding the landlord of the positives
on both sides. You could, for instance, say: “If we sign for two years, you
have reliable tenants and we have more security.” Mr Osmond adds: “Remember,
saying nothing can sometimes be as powerful as speaking, provided that
silence is used at the right time and in the right way.”
The moment at which you might most powerfully employ a pregnant pause is once
you have suggested your final offer. Nerves often prompt people to talk over
silences like this, which can make them look unsure. Instead, be confident
enough to wait for the landlord to agree to cheaper rent once you have asked
for it.
Sub-let a room or sofa
If your landlord refuses to budge, you may be able to sub-let an unused room,
or even a sofa, to bring in a little more money in the short term.
Websites such as gumtree.com will give you an idea of how much to charge and
how to market what you are offering to potential new flatmates. Go to
landlordzone.co.uk for more guidance on the practicalities of renting out a
room, but check with your landlord first before sub-letting.
CASE STUDY
Martyn Nixon lives in a rented flat in the exclusive and expensive Marylebone
area in West London, which is within walking distance of trendy Soho and the
West End.
Rent in this fashionable postcode is at a premium, but the 28-year-old
marketing manager, and the two friends with whom he shares the flat,
negotiated about 10 per cent off the standard cost by agreeing to sign up
for a longer-term, two-year tenancy.
When they negotiated the agreement before moving in November the three
flatmates also strengthened their bargaining power by taking the flat
unfurnished.
Mr Nixon says: “I am saving for a deposit, but at the moment the property
market is pretty unstable and I have no plans, or the capabilities, to buy
somewhere desirable just now.
“Getting the rent down has made a huge difference to my being able to
save, and looking around at the going rates in estate agents' windows it
appears that we have secured a good deal.”
Somewhere to crash on the cheap
If you cannot afford - or bear - to rent, there are a handful of cheaper
options for deposit savers, Mark Bridge writes. Here is Times Money's
mini-guide.
If you are single and your parents live within range of your workplace, the
obvious choice is to live at home. There is now little stigma attached, and
you will not be alone. Research for Alliance & Leicester indicates that
the majority of would-be first-time buyers remain in the parental nest. You
will not be liable for council tax - although your family may expect a
contribution - and should be able to blag a heavily subsidised stay.
A little-known option is to register as a “guardian” with a company such as
Camelot Property (www.camelotproperty.com). The company's guardians move
into vacant properties across the country for periods of three months-plus,
paying rent of £25 to £60 a week, inclusive of utility bills and council
tax. The idea is that they keep the place in order, deter squatters and save
the owner the cost of contract security.
Camelot has a range of building types on its books, from detached homes in
excellent repair to shabbier warehouses and industrial units. Properties may
house a number of guardians - five, on average - and couples, but not
children, can be accommodated. Current listings include refurbished office
space in Peterborough and a seafront hotel in Weston-super-Mare.
Smoking and house parties are not permitted, and guardians can be asked to
leave with two weeks' notice after the initial three months. Successful
applicants can be placed within a week. Guardians must pay a fee of £50 and
a refundable deposit of £400 per placement in addition to the weekly
payment. Camelot says that most of those coming to the end of one placement
can move on to another within days.
A much riskier alternative is to squat. This is not in itself illegal,
although you may be arrested if you break into a property - even with
minimal damage - or refuse to leave when the landlord obtains a court order.
Shelter advises people looking to squat to contact the Advisory Service for
Squatters (Squatters.org.uk) for legal information, tips on finding a
suitable building and advice on day-to-day practicalities. One of several
serious downsides is that someone must typically be in the squat at all
times because the landlord cannot legally force entry into a property that
is occupied.
How best to put money towards buying your first property
Save regularly, even if you start small. Check the best interest rates at
moneyfacts.co.uk, the comparison website
Use your tax-free Isa savings allowance of up to £7,200 a year.
Watch out for accounts that carry penalties for withdrawals and for deals that
include short-lived initial bonus rates.
If saving for more than five years, consider investing in equities for higher
returns. For shorter periods, stick to lower-risk cash options.
Those tempted to dip into their savings should look at fixed-term accounts,
such as the Fixed Rate Monthly Saver from Abbey, or regular savings accounts
that do not penalise the occasional withdrawal, such as the Regular Saver
from Yorkshire Building Society.
If you have large debts on high interest rates, clear these before starting to
save.
