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Financial issues Laws Property

3 things you need to look for when signing a tenancy

On my blog I cover most areas of consumer rights. However there are some topics where I ask a specialist to give expert advice.

I have asked Christian Weaver, barrister and author of The Law in 60 Seconds: A Pocket Guide to Your Rights – to explain your rights when it comes to problems with renting. He tells me:

“I am probably asked more questions on renting than I am any other area of law. It’s also an area where a real imbalance of power can exist, and therefore, just sitting back and hoping things will go smoothly between you and your landlord sometimes just isn’t good enough.”

Open hand with set of keys

Type of tenancies

Before we dive in, there are several different types of tenancies. The vast majority of you reading this will be in what is called an assured shorthold tenancy. If you don’t live with your landlord, your tenancy started on or after 28 February 1997, and you aren’t paying rent of more than £100,000 a year or less than £250 a year (less than £1,000 in London), you will usually have this type of tenancy. It is therefore the assured shorthold tenancy that I’ll focus on in this blog piece.

From my own experiences, those of my peers, and those I have seen as a barrister, there are three main things you ought to check and be sure of.

How long am I tied into the contract for and what does this mean?

For an AST, the tenancy agreement (or ‘contract’) will likely contain a fixed period of time (a ‘fixed term’) that the tenancy will last for, e.g. 6 months or 12 months. You will have to pay the rent until at least the end of the fixed term unless an agreement can be reached with your landlord or your contract allows you to end the tenancy early (i.e. through a break clause – more on this later).

Once the fixed term is over, a periodic tenancy will often automatically come into place. This is where the tenancy rolls over on a weekly or monthly basis. If you wish to leave a periodic tenancy, you will usually need to give at least 1 month’s notice if your rent is due monthly, or 4 weeks’ notice if it is weekly.

Before you sign, double­check your contract to ensure that you will not be required to give more notice than this (look for a heading in the contract stating ‘Notice period’ or something similar). If you will be required to give more notice than this and you think this could be a problem, now is your chance to say.

Is there a break clause in the tenancy agreement?

A break clause is a clause in the tenancy agreement enabling either party – whether that be you (the tenant) or the landlord – to give notice (i.e. advance warning) to terminate the tenancy agreement before the end of the fixed term. The amount of notice that needs to be given should be clearly stated in the break clause.

If a break clause is not included in your contract and you think this flexibility is important, consider asking for one to be put in. Just remember that your landlord can also make use of the break clause if they want to get rid of you!

Will you be a ‘sole tenant’ or a ‘joint tenant’?

You are a sole tenant if the tenancy agreement you are currently looking at is in your name only. Simple. Don’t let the fact that you may be moving into a property where others currently live confuse you. You can be a sole tenant and still live with others. A prime example of this is where each person has exclusive possession of a specific room – perhaps ‘bedroom 2’ is your room only, but you and others will share the kitchen and bathroom. have an idea of what your rights and responsibilities will be.

You are a joint tenant if, along with others, you all sign your names on one single tenancy agreement. This is a typical scenario for friends at university who are renting a house together. In this situation, rather than signing a contract for a room (as shown in the example above), you all sign a contract for the house, and then argue over who gets the best bedroom.

The rights and responsibilities you will have will vary, depending on whether you are a sole or joint tenant.

About the author

Christian Weaver headshot

Christian is a barrister at a leading human rights chambers, where he regularly represents clients whose rights are at risk.

He previously worked at INQUEST and volunteered at Liberty and Nottingham Law School’s Legal Advice Clinic.

In 2018, concerned about the increasing number of people he knew being stopped and searched, he created the YouTube series ‘The Law in 60 Seconds’ to inform people of their rights and make the law accessible; those videos have now been viewed thousands of times, and been featured on BBC News, in the Guardian and the i Paper. The concept has since been turned into a book.

(AL)

 

See also What you are entitled to when moving into a rented property

What are your rights regarding tenancy deposits?

How to complain about poor rented accommodation conditions

Twitter: @ChristianKamali

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BNPL – Better Not Pay Later?

Get back those bank chargesIs BNPL good for your finances? OR Should you ever “pay later”?

Buy Now Pay Later (BNPL) is a type of credit which has become increasingly popular over the last few years.  Brands include, for example, Klarna, Clearpay, Laybuy and Openpay.

These companies make their money by contracting with retailers, who pay them a percentage of the sale.

BNPL can seem very appealing if you are strapped for cash. If you purchase a high ticket item that you really need, you can defer payment without paying interest. However, if you miss a payment, you can end up paying a big penalty. Sometimes, it can be interest from the start of the monthly payments and other times from the month of the missed payment. You may also incur late payment fees.

Some schemes offer repayment terms of 30 days and others up to 12 months.

Is BNPL widely used?

The This is Money article Buy now, pay later purchases surged last year with more relying on it as the cost of living rocketed – and one in five now use it once a month described how, against the backdrop of increased energy and food prices, more and more people are feeling the pinch:

“19 per cent have increased debt either by taking out new credit, increasing existing credit or going into their overdraft.

Against this background, BNPL services continue to grow in popularity, with many consumers using Klarna, Clearpay and others to spread payments or pay later.

Of those who use BNPL, one in four say they rarely have the money in their account to pay in full for the things they are buying.

Research also suggests that some people using BNPL are doing so when they are struggling financially.”

Pros and Cons of BNPL

BNPL can help you spread payments, helping with your cash flow. It also allows you to order a number of items before choosing what to buy before sending items back. It is possible to use BNPL and not pay anything over the cost of the item but you need to be careful.

There appear to be few money experts in favour of BNPL.

Hannah Duncan from HD Investment Content discusses in her article It’s not fair to target young people with Buy Now Pay Later how BNPL can prey on young people’s insecurities. She interviews a psychologist and has conversations with debt charities about some of the negative impacts on vulnerable people. The conclusion from is that there needs to be more “friction”:

“We need more friction, more protection and less emotive marketing… Our young adults need support, not more debt. something the FCA is debating at the moment. In non-technical terms this means that getting credit of this kind should not been a “smooth” process, there should be more “friction”. In short, it should be more difficult to get any kind of credit.”

She goes on to say:

“Promoting effortless debt for unnecessary items like fast fashion isn’t just unfair for young people, it can impact our whole society. Most importantly, young people deserve more support – not extra debt options – as they navigate through pandemics, stagnant wages, recessions and astronomical university fees”.

Financielle helps women to take control of their money and be financially well. Financielle founders Laura and Holly have very strong opinion on BNPL, as you can read in their article Buy Now, Pain Later. They discuss the targeting of women and the dangers involved in using BNPL, providing readers with the stark but sound advice to “ditch BNPL and instant gratification…”

Naomi Willis from money saving website SkintDad says “Buy Now Pay Later may seem like a good idea, but it can quickly spiral into an expensive debt trap. It’s also worth considering the environmental impact. Using BNPL can mean you get to try multiple sizes and styles [of clothes/footwear] without having to pay up front, but once you’ve returned the goods of the brand new items end up in landfill, rather than being resold.”

Sara Williams is a volunteer advisor at Citizen’s Advice and runs the debt advice website Debt Camel. She says “BNPL can seem very convenient, but that is the main problem – by removing some of the “friction” from an online purchase, BNPL makes it too easy for many people to buy more than they want or can afford. Proper regulation and credit reporting is needed so that as much as possible of the advantages are kept, but the problems are reduced.”

The lack of regulation of BNPL

BNPL is currently unregulated. So, unlike other financial credit agreements providers do not have to carry out similar checks to other lenders. Conventional credit checks would ensure you can afford the payments and the lender would have to tell you in detail about the product and what will happen if you don’t pay.

At the moment also you cannot use the Financial Ombudsman if you have an issue and you don’t have Section 75 protection.

The Government is consulting on the Regulation of Buy-Now Pay-Later, closing  at the end of 6 January 2022.

Can you afford BNPL?

Using BNPL may be a good way to spread payments. But you must work out if you really can afford it before purchasing that item. It might well be that you have a month with big car bills, for example, and that after then cash flow will be easier.

However, if you are thinking of spreading out a payment plan over a number of months, list your other expenditure for each of those months to see if you can really afford it. Also, take into account the possibility of increased energy bills, for example.

Using BNPL may affect your credit score. All you need to know about credit score rating. Check your credit score before applying, as you may be refused.

Look at other ways to save in all areas of your life. If you are already in debt you can get advice from Step Change, Citizen’s Advice, Debt Advice Foundation, Money Helper and Debt Camel.

2 piggy banks,coins in two jars credit card and machine to pay