marylsommers: First-time renters face stiff competition

Demand in the rental market is soaring as would-be buyers struggle to raise mortgages. But you can improve your chances of finding a place, says Esther Shaw

It's not just buying a first home that young people are having a problem with ? first-time tenants are also finding it increasingly difficult to find a home as rents and deposits reach record highs.

More than seven people search for every room that comes on to the rental market, according to Spareroom.co.uk. This huge demand is pushing rents up, and as they climb so too does the size of the average deposit. Much of the demand for rented property is coming from would-be first-time buyers struggling to meet lenders' deposit requirements.

"Securing a mortgage remains a herculean task for the average would-be buyer," says Jonathan Moore from flat-sharing website EasyRoommate. "This will continue to pile pressure on rented accommodation, and rents can only head in one direction ? up."

Rents rose for the seventh month in a row in August, according to LSL Property Services, with the average rent in England and Wales reaching �713 a month, and �1,025 in London; the typical one-month deposit on a rental property in London is now more than �1,000.

Given that rents and deposits are expected to carry on climbing, and competition for homes will get even more cut-throat, what can first-time tenants do to improve their chances of getting on to the rental ladder?

Two of the best ways to do are to make sure your credit rating is up to scratch, and having suitable references. With landlords able to cherry-pick tenants, this can make life difficult for those with a poor credit rating who may find they are refused tenancy, or asked for a higher deposit.

As James Jones from credit reference agency Experian says: "The landlord may seek additional security in view of the higher risk of default."

Nonetheless, Matt Hartley from the Consumer Credit Counselling Service says a poor credit rating need not be a barrier to taking the first step. "Most letting agencies will perform a credit search as part of the application process, and if the prospective tenant's credit rating is particularly poor they may ask for a guarantor, such as a parent," he says.

Nicky Chambers, a lettings manager at estate agent Douglas & Gordon, adds that there are certain criteria a guarantor must meet. "They have to be a UK homeowner, earn at least �35,000, and must pass the necessary credit reference checks," she says.

It is also worth bearing in mind that some letting agencies and many private landlords will rely solely on references from a bank, employer or previous landlord rather than a credit check, Hartley adds.

"Showing the bank, and the landlord, that your finances are stable month-by-month by sticking to a budget and not living off an overdraft is a sure-fire way to ensure your chances of securing a tenancy," he says.

As a prospective tenant, it is advisable to review your credit report to check it is accurate and up-to-date. "You may be able to identify ways to improve your credit record, such as registering on the electoral roll and closing unused lines of credit," Jones says. "Landlords will be able to see any court judgements or insolvency records, so pay off any judgement as quickly as you can, and get your report updated."

For those who are unable to cover the costs of their own property, or gather a necessary deposit, a flat-share can offer a cheaper and more flexible alternative.

Samantha Baden, a property analyst at FindaProperty.com, says: "If you're looking to flat-share, find out whether you are on the lease, and whether the tenants are individually or collectively responsible."

Set up standing orders, as this means you can't forget to pay and saves anyone having to ask for money.

Matt Hutchinson from Spareroom.co.uk says anyone looking for a flat-share needs to choose their location carefully and act fast.

"You may be able to rent more cheaply if you can compromise by living a bit further out of town, taking a smaller room in a house-share, or sharing a room with your partner," he says. "To stand out from the competition, get your finances sorted upfront and be ready to commit when you see the property you want."

Don't forget that presentation is important, and that being enthusiastic, flexible and polite with your landlord or future flatmates can also help improve the chances of them picking you.

Social lettings

The challenging economic environment is leading to more tenants relying on assistance from the government, with social lettings now accounting for 13% of all new lets ? the biggest proportion since 1999 according to the Royal Institution of Chartered Surveyors.

If you are a housing benefits tenant, deposit demands should not be any higher than for anyone else, according to Tim Hyatt, head of lettings at Knight Frank, as the landlord has a guarantor in the local authority.

At present, many tenants choose to have their housing benefit paid directly to their landlords to cover the rent. Despite this, not all landlords are comfortable about social housing tenants, according to Alice Umfreville, a lettings manager at Douglas & Gordon, "because the rents are paid in arrears, rather than in advance".

Many are also concerned about government plans to pay the new universal credit directly to tenants under the Welfare Reform Bill. The National Housing Federation believes this could undermine consumer choice and threaten landlord income streams, and is calling for tenants to have a choice to go on having their benefit paid directly to their landlord.

Case study: 'whoever bids highest wins'

Alex Brown is struggling to find a rental property in London, where flat-shares are snapped up quickly.

The 22-year-old started flat-hunting when he came to the capital three months ago to start a job at a media agency.

"When I call to enquire about flat-shares within my budget of around �600, they've already gone ? or the price has crept up," he says.

Alex recently found a room in a six-bed flat-share in Willesden Green, north-west London, and was due to move in during October ? but this has just fallen through.

"My new housemates sent a text saying one of their friends, who is willing to pay more than me, is moving in instead," Alex says. "It seems to be a case of whoever bids highest wins. I've now got to start all over again."

Even when Alex does eventually find a place, he is going to have to borrow money from his parents. "I'll also have to sell my car, as I'll need to hand over six weeks' rent as a deposit, as well as the first months' rent at the outset," he says. "I rather naively thought that I'd only have problems when I became a first-time buyer, and had no idea it would be this difficult financially to become a first-time renter."

Esther Shaw