Home in on the best deals around for tenants

The recovery in the housing market has meant rising rents and a shortage of lets

The problems faced by would-be renters are at the opposite end of those that once faced owners. Over the past two years, rising house prices have allowed many hard-pressed homeowners to climb back out of negative equity.

Figures from Halifax show the price of the average UK house rose 5.4 per cent in 1997. Leading the growth was greater London, where an increase of 15.2 per cent took the price of the average house back above pounds 100,000 for the first time since 1989.

But this good news for homeowners is bad news for would-be tenants. Negative equity created a group of so-called "reluctant landlords" who could afford to move home only by letting out their old property. About half of the property lets managed by estate agents are owned by people working overseas or in another part of the UK.

Many of these landlords are selling up as their existing tenants' leases come to an end. The result is a shortage of good-quality private-rented accommodation, and soaring rents for that which remains.

Hugh Dunsmore-Hardy, the chief executive of the National Association of Estate Agents, says: "Many landlords are selling, and that does create shortages. Hence, rents will go up."

Judging by the Royal Institute of Chartered Surveyors' (Rics) latest report on residential renting, this is happening all over the country. Rics' member, Mike Huxtable, of Ottery St Mary, Devon, reports: "A complete lack of properties coming on to the residential sales market [is] tending to increase rents for those that do become available."

Patrick Waters, of Solihull, West Midlands, agrees, saying: "There is a shortage of good-quality property, and rents are creeping upwards." David Moulton of Southampton says rents in areas near him have been climbing by 10 per cent a year.

As the table below shows, rents have been climbing fastest at the top end of the market, where the excess of demand over supply is biggest. Rising rents are not the only hurdle tenants face. Care is also needed in choosing a good letting agent. In many cases, it is the agent who will retain your deposit. You will want to be sure this deposit is safe and that it will earn interest for you until the tenancy ends.

Mr Dunsmore-Hardy says: "Once a tenant has agreed to rent a property, they may have to lodge anything from a month to six weeks' deposit. The important thing is to deal with an agent who has a money- protection scheme in place. The tenant's also perfectly entitled to have the deposit accruing interest, the benefit of which comes to him."

A money-protection scheme means your deposit will be safe even if your letting agent goes bust or disappears. If the agent you use is a member of the Naea, Rics or Arla (Association of Residential Letting Agents), they probably have a money-protection scheme - but you should still check.

For a free copy of Rics' guide, `Renting a House or Flat', call 0171- 222 7000.

Checklist for Tenants

Check what term you are signing up for. Tenancy agreements known in the jargon as assured shorthold tenancies typically run for six months, but can run for longer.

Check what furniture, fittings and appliances are included in the let. Ensure the inventory records any damage already there when you move in.

Furniture and appliances included with the let must meet statutory fire and safety requirements. If in doubt, ask to see the landlord's certificates of compliance.

The letting agent should give you a written statement specifying the rent, deposit and any charge to you for drawing up the tenancy agreement. Check who is to pay future costs for items such as checking the inventory or renewing the agreement.

Ask who will be holding your deposit and whether the money will earn you interest. If the letting agent is to hold it, check they have a money- protection scheme. Check how you get the deposit back.

Establish who is responsible for any repairs to the property and who you can approach to sort out any problems. The letting agent must give you an address in England and Wales you can contact.

Before you sign the tenancy agreement check all utilities are connected at the property. Read the meters and note what they say. If there is a garden, check whether you are responsible for its care.

Check if you are agreeing to any conditions which apply when you move out. Some landlords specify you must clean all the carpets, for example.

Insure any valuables you are bringing into the flat. The landlord's insurance will not cover this.

Get a receipt if you pay rent or a deposit in cash.