Generation rent is throwing their money away. There's officially nothing that today's under 30s can do in order to battle their way onto the property ladder - at least in the foreseeable future. Renting is no longer a temporary state, or a stop-gap solution, it's a way of life.
And unless you embrace it as such, you could end up wasting thousands of pounds on the five rental money traps.
Generation rentThe last few months has seen yet more evidence emerge that we are in the midst of generation rent. A report by Sir Adrian Montague on the private rental market yesterday was just the latest to see rental as a way of life. Earlier this summer the Joseph Rowntree Foundation revealed that by 2020 the number of homeowners under the age of 30 would fall 46% to 1.3 million.
The arguments will always rage as to whether renting is a waste of money. There will always be a camp that says it's essential to buy at any costs, so your monthly money is going on paying back the mortgage, and you can have a bit more control over your outgoings. Figures out this month from specialist letting agents' insurer Endsleigh show that the average monthly rent across the UK in 2011 rose for the third year running to £706 - compared with £688 in 2010 and £663 in 2009.
However, while we argue the toss on this front, we are missing the key point: that because we tend to see rental as a short-term solution, we are not giving it the attention it deserves, and as a result, renters are likely to fall into five very expensive money traps, which could cost them £1,500 a year or more.
1. Excessive chargesWhen you sign up to a new property, a letting agency may charge you a small fortune in fees (not necessarily the agents featured in the photo). However, you don't need to go along with these. Take the Assured Shorthold Tenancy agreement. You can be charged over £250 for one of these by a letting agency, when they can be downloaded free from the internet. Likewise, you can be charged up to £50 for a credit check, when they are available for as little as £15.
You don't have to stand for these outrageous charges. You can either discuss alternative approaches, or vote with your feet and find an agent with a more reasonable approach. Standing firm could save you £300.
2. Failure to negotiateIt may seem like your landlord holds all the cards, but they are keen to let, and if you have been in the property for a year or more, it's far easier for them to continue renting to you than to take the risk with someone new. So when you come to sign a contract, or renew it, there is room for negotiation.
On a basic level, you should search around for comparable rental costs and if you are being overcharged, show your landlord the alternatives and ask for a reduction. If they have thrown in additional costs, or there are clauses in the contract you don't like (such as the ability for them to break the contract and throw you out after six months) then at least ask for them to be removed. Simple negotiation could save you £600 a year.
3. Failure to ask for details up-frontWhen you are looking at a property, it's vital to ask about running costs. The current tenants will have recent bills, and you have every right to ask for approximate costs. Often you won't know abut a draughty bedroom that costs a small fortune to heat, or an electric heating system which costs four times more than the alternatives. Proof of average heating costs will save you making a very expensive mistake. By sidestepping a property that's ruinously expensive to run, you could save £300 a year.
4. Ignoring utilitiesYou have as much right to change utility companies as any homeowner, and this small step alone could save you £200 a year. However, according to uSwitch, less than a third of private renters are aware that they can switch energy suppliers, subject to their rental contract, and just 38% have ever bothered switching.
Ann Robinson, Director of Consumer Policy at uSwitch.com, says: "With more and more people renting, it's vital that people don't feel that being a tenant means relinquishing the right to control their household bills. The fact is that if your name is on the bill you have the right to shop around for a better energy deal. If your rental contract says otherwise, then talk to your landlord or letting agent - at the end of the day it is in both parties' interests for rented homes to be on a cost effective tariff."
5. Energy inefficiencyuSwitch research also found that over a quarter of renters wouldn't talk to their landlord about energy efficiency because they don't think their landlord would be interested. Worryingly, over one in ten private tenants wouldn't even feel comfortable raising it with their landlord.
As a result, 41% say that the home they are currently living in has little or no energy efficiency measures installed, and just 6% say that it is extremely energy efficient. Unfortunately, as energy costs spiral upwards, this lack of dialogue will be costing tenants dear.
Insulating the property need not cost your landlord anything. Robinson says: "Now is a good time for private landlords to look at energy efficiency. Energy suppliers have a pot of money to spend on making their customers' homes energy efficient and only have until the end of this year to spend it in order to hit Government targets. As a result, there are now a huge number of offers for home insulation, ranging from the free to the heavily subsidised. Taking advantage of these now would benefit both landlords and tenants, as a minimum outlay will see lower energy bills and a more attractive, rentable home."
Other forms of energy efficiency are worth tenants taking on themselves. This includes installing low energy light bulbs and turning down the heating and temperature of the water you wash your clothes in. When it comes to time to change appliances, rather than leaving the decision of what appliance to buy completely up to the landlord, it's worth investigating the cheapest energy efficient models and making suggestions. A mixture of these approaches can easily save you more than £100 a year.