For many young people, the end of summer or the beginning of fall means looking for a rental home and moving out. It is an important step in starting independent life that assumes greater responsibility, including taking care of one’s own finances. The following article gives an overview of the things a young (future) tenant should be aware of.
Head of Legal at Rendin, Lia Siht gives advice on how to prepare for moving out by focusing on these topics:
Financial matters related to renting: the budget and additional one-time fees
How to introduce yourself to a possible landlord: a self-introduction and plans related to the rental home
Rental documents: the rental agreement and handover act
You should first consider the essentials of your future rental home Perhaps the location and city district, proximity to your place of employment or school or the size and the number of rooms. You could then browse rental advertisements that correspond to your requirements in order to familiarise yourself with the current rental prices.
You may learn through such background work that the level of prices is higher than you expected and may have to think of alternatives. For example, looking at other districts or finding a roommate to share the expenses with.
Before signing the first rental agreement, the tenant should evaluate their monthly solvency, meaning the income (salary, study allowance/scholarship, financial support from parents, etc.) and expenses (rent, utilities, transport, food, hobbies, etc.).
The main home-related aspects are rent and the related expenses, such as utilities, home Internet package, parking fees and so on.
It is generally recommended that the rental fee should make up a maximum of 30–40% of your monthly income. For example, when the tenant’s gross salary is 1000 euros per month, then home costs should remain between 300–400 euros.
Utility costs may vary to a great extent – depending on the location, building and the size of the apartment. Most landlords provide an overview of utility costs in the rental advertisement, but to be sure, you should ask to see some utility bills when you go and see the apartment. You should consider an additional 10–20% of reserve to avoid negative surprises, should service providers raise their prices.
The rental fee with utilities and other invoices should not exceed one half of your monthly expenses (or 60% at most).
If the tenant has active loans and/or instalment payments, then these should be deducted from the monthly income as the very first thing so that you know the sum left after you have covered your loan obligations.
Among other things, Rendin runs background checks on possible tenants, and we have lately noticed a trend that shows the attitude of some young people towards financial affairs. Despite their age, they have already accumulated quite a lot of loan obligations and instalment payments an also spend on gambling in online casinos.
All these additional obligations influence the ability to find and maintain a living space. It is therefore necessary to stress that there needs to be a balance between expenses and income. Otherwise, the financial obligations will grow out of hand and after some additional (fast) loans, the person will have inconspicuously fallen into debt.
When looking for a rental home, be mindful of the amount of the initial fees for the tenant. Is there a deposit? Do you need to cover the agent and/or contract fee?
These amounts may vary greatly. Let’s take apartment with a monthly rental fee of 420 euros. If the owner offers a rental agreement without a deposit, then your initial fee may be as much as the first month’s rent. If there are additional one-time expenses as you move in, then these may be up to 1260 euros in this case (one month’s rent, a deposit in the amount of a monthly rental fee, the brokerage fee). You should also be aware that the Law of Obligations Act enable to ask for a deposit in the amount of the rental fee for 1–3 months.
Is a deposit required when renting through Rendin? No, when using Rendin, no deposit is required from the tenant.
All prices have increased rapidly over the past year. The inflation rate is still high, and the next autumn-winter period of high heating bills is still to come. This means that you should collect some additional finances in order to cope better. Saving in small sums is already a good start.
As Rendin is a secure rental agreement platform, we have daily contact with tenants as well as landlords. Thanks to this we have a good overview on what landlords consider necessary to ask from people who want to rent the apartment they offer.
Our first recommendation to possible tenants is to be active and open themselves. For example, a summarised self-description is a great opportunity to make initial contact. It should contain:
a short personal introduction
your daily activities – work, school, hobbies, etc.
why and for how long of a period did you choose this apartment
who do you plan to live with in the rental home – alone, with a partner, a friend, a pet, etc.
We recommend considering these additional questions which may come up when talking to the landlord:
Have you rented a home before and for how long?
What is the reason for changing homes?
Make sure to read the rental agreement thoroughly before signing it. For the sake of clarity, you can go through the contract with the landlord. There are no dumb questions – if something remains unclear, be sure to consult with the landlord. Open communication is an important prerequisite for building and maintaining a good rental relationship.
There are two types of rental agreements. A fixes-term agreement means that the contract enters into force and ends at a specific date. A termless agreement also enters into form at a specific time but has no agreed end date.
A termless rental agreement is more flexible than a fixed-term one because:
The tenant as well as the landlord can terminate the agreement ordinarily and unilaterally. It is necessary to inform the other party 3 months in advance. Rendin also has a special tenant’s notification template for terminating a rental agreement (see here).
A fixed-term agreement cannot be terminated ordinarily and unilaterally. The only option for the premature termination of this type of agreement is an extraordinary situation that needs a very serious cause and means that the termination of the agreement is in the interests of both parties.
Check what the agreement says about normal wear and tear – if the landlord accepts it or has set forth that the living space must be returned in a condition where all signs of wear and tear under normal use have been removed. This clause in the Law of Obligations Act governing rental agreements entered into force in 2021.
The rental agreement must clearly state the term of payment of the rental fee and the payment requirements (data of the recipient with the bank account number). If rent is paid in cash, it is very important to keep written records of the payments. For example, the landlord confirms the receipt of payment via e-mail to the tenant.
The handover act is the other important document besides the rental agreement. It is the agreement between the tenant and the landlord that is prepared and confirmed when the property changes hands. Formalising the instrument is in the interests of both parties as it provides the necessary evidence base for a more successful solution of possible misunderstandings and claims.
A properly prepared act has:
documents the condition of the living space at the moment when the tenant moves in and moves out;
contains up-to-date photos;
lists the assets in the living space and the most recent meter rates.
This enables to compare two instruments correctly: the one that was made at the beginning and the other that was made at the termination of the rental agreement.