Rental rip-offs: How people are cashing in on property shortages and how to protect yourself

There’s a horrible imbalance in the rental market right now. Landlords have been persuaded out of the business in droves, by rising mortgage costs, increased legislation and punitive tax rules.

Meanwhile, tenant numbers have continued to grow. It means a queue of desperate tenants whenever a property becomes available, and a real opportunity for landlords to exploit them.

If you’re struggling in the rental market at the moment, it’s important to know your rights.

There’s not an awful lot of good news in this area, but there is some. When you’re starting a new tenancy, you’ll no longer be fleeced for sky-high fees. Rental fee rip offs have been outlawed across the UK, so you can’t be charged hundreds of pounds for things like references and credit checks. Now fees are limited to a handful of charges in England, and even fewer in Scotland.

There will still be up-front costs, however. Some landlords are asking for holding deposits if you want to secure a property. It’s worth knowing that these are outlawed in Scotland, and although they’re allowed elsewhere, it can’t be more than a week’s rent.

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Once you sign an agreement, you should either get it back, it should go towards your first months’ rent, or it should form part of the property deposit. If none of these happen, you can complain to Trading Standards or contact the letting agent’s redress scheme.

There’s the security deposit too. These have been creeping up, but there are limits.

In England and Wales, you can’t be charged more than five weeks’ rent, unless your rent is more than £50,000 – in which case they can charge up to six weeks’ worth.

In Scotland it can be up to two months’ rent, and in Northern Ireland, one month’s rent. If your landlord asks for more, you can challenge it. If you aren’t convinced this is something you can do alone, contact Citizens Advice and they can give you advice on the best approach.

In most cases, within 30 days, your deposit should go into a recognised deposit protection scheme. If your landlord wants to withhold some of it – to cover damages or unpaid rent for example – you will both have to agree to it. You won’t be able to withdraw the cash without their consent either, so if there’s a disagreement, you’ll need to use your scheme's free alternative dispute resolution' service to help get your deposit back.

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Once you’ve started renting, your rights will depend partly on the type of tenancy you have. In England most are shorthold tenancies. Some of these are for a fixed period, and the rent can’t go up during this time – unless there’s a rent review clause in the contract. Some of these agreements are ‘rolling’, which means they run until either the tenant or the landlord call a halt to them, but the rent can still only go up once a year.

At the moment, there’s a real risk that these annual rent hikes are at eye-watering levels. Rents outside London have risen to a record high of £1,231, according to Rightmove – which is a third higher than it was four years ago. In some areas, rents are up 20% in a year. This is partly because of the squeeze on supply, and partly because higher mortgage rates mean landlords are hiking rents significantly to cover their costs.

If they push the rent up by more than you can afford, your rights depend on where you’re based. In England, landlords can charge what they like, as long as they follow the rules. You can try to negotiate, but they don’t have to listen. If the rise is unreasonable – so for example if the condition of the property is poor or they haven’t done repairs effectively, and in good time, you can appeal to a rent tribunal – any time before the date of the rent hike.

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In Scotland, you have more rights, so within 21 days of being told of a rent increase, you can contact a rent officer, and they will decide what the rent of the property should be. If you or your landlord disagree, you can take it to a tribunal. Scottish ministers also have the power to impose a local rent cap if they think costs are getting out of control. In Scotland, you have more rights, so within 21 days of being told of a rent increase, you can contact a rent officer, and they will decide what the rent of the property should be. If you or your landlord disagree, you can take it to a tribunal. Scottish ministers also have the power to impose a local rent cap if they think costs are getting out of control.

In some cases, landlords don’t want the rigmarole of raising rents and dealing with angry tenants, so they get rid of them, and then advertise the property at a higher price. In England, if you have a rolling contract, your landlord can oust you when they want. If you have a fixed term contract, they can evict you once the term ends - they don’t need a particular reason, they just can use a Section 21 eviction. This will be outlawed in England under the Renters Reform Bill, which is set to come into force next summer, but in the interim you can be out on your ear.

The rules are different in Scotland, Wales and Northern Ireland. In Scotland, for example, you can only ask a tenant to leave on one of 18 grounds for eviction – and wanting someone new who will pay more rent isn’t one of them.

In a market like this, with so many tenants chasing so few properties, it can feel like you’re utterly powerless. But while the landlord definitely has the upper hand, they can’t take the opportunity to ride roughshod over the rest of your rights.

• Sarah Coles is a personal finance analyst at Hargreaves Lansdown and co-presents Switch Your Money On podcast.

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