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How much rent can you afford?

Renting is a significant financial responsibility, and it’s important you understand this goes beyond just your rent payments. There are a lot of other costs you need to think about. 

Estimate the cost of your rent plus bills

Renting a home involves more than just being able to pay your rent.

There might be a lot of other bills you might be expected to pay as a tenant.

Your landlord might be paying for some of these directly and charging you through the rent. So, it’s also important you understand what bills you’re responsible for paying.

Council Tax, utilities and service charges

  • Water bills (usually paid monthly)
  • Service charges (in some properties – paid monthly or annually)
  • Council Tax (usually paid monthly - England, Scotland and Wales) or rates bill (N.I)
  • Gas and electricity bills (either by a pre-payment meter, monthly by Direct debit)

Ask the agency, landlord or previous tenant to give you estimates for these bills when you have a look around the property.

Other monthly costs affecting how much rent you can afford

Bear in mind you’ll probably have extra monthly bills to pay, such as:

  • A TV licence (paid monthly or annually – visit tvlicensing.co.uk to find out how much this costs)
  • Landline phone bill (plus any connection charges – can be paid quarterly or monthly)
  • Contents insurance (paid monthly or annually)
  • Digital TV or satellite TV subscriptions (paid monthly)
  • Broadband bill (paid monthly or quarterly)
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Draw up a budget of all your costs

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Try to make a realistic estimate of what you’ll spend each month on other day-to-day expenses such as:

  • mobile phone
  • food/clothes
  • travel/car insurance
  • childcare/maintenance
  • gym/hobbies/nights out
  • loans or credit card repayments.

If in doubt, over-estimate rather than under-estimate.

You don’t want to risk getting into debt after a few months because you forgot to factor in one of your regular monthly payments.

Once you have estimates for each of these items, you can draw up a budget so you can calculate how much rent you can afford.

This will show you exactly how much money you have coming in each month and how much you have going out in expenses.

Then you’ll have peace of mind you will have enough money to live on, once you have paid your rent.

Remember to divide an annual expense - such as paying for Christmas or a summer holiday – by 12, so the cost is split evenly across the year.

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Don’t forget the upfront costs

Before you sign the tenancy agreement, you’ll need to make sure you can afford to pay the costs of moving into the property.

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Rental deposit

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Your deposit is likely to be the biggest expense if you’re renting a new place, so make sure you have these funds before you commit yourself. If you have a private tenancy and have paid a deposit to your landlord (or agent), by law it must be protected in a government approved scheme.

In England and Wales, refundable tenancy deposits are capped at no more than five weeks’ rent for assured-shorthold tenancies if the rent is less than £50,000 a year, and six weeks’ rent if the rent is more than £50,000 a year.

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This money will be held in a deposit protection scheme and, if there’s no damage, you should get it back when you move out.

If you don’t have the money for a deposit, ask your local council to find out whether there are rent deposit, bond or rent-guarantee schemes in your area to help you.

But bear in mind not all landlords and lettings agents will accept deposits in this form – you’ll need to ask.

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Agency fees

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Letting agents or private landlords in England aren’t allowed to charge admin fees for things like checking references, or renewing a tenancy for shorthold tenants, student lettings and lodgers living with a private landlord. .

Letting fees were already banned in Scotland, but are still legal in Wales and Northern Ireland.

For example, charges for checking references range from £10 to £275, while charges for renewing a tenancy range from £12 to £200.

Fees can still be charged for late rent payments, ending your tenancy early or transferring your tenancy.

Removal or storage fees

Get local estimates for these.

You might probably save yourself money by hiring a van and doing the job yourself, if you’re up to it.

Furniture or furnishings

If you’re moving to an unfurnished place, don’t forget to budget for the cost of furniture and soft furnishings such as curtains.

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Looking for us? Now, we’re MoneyHelper

MoneyHelper is the new, easy way to get clear, free, impartial help for all your money and pension choices. Whatever your circumstances or plans, move forward with MoneyHelper.

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MoneyHelper is the new, easy way to get clear, free, impartial help for all your money and pension choices. Whatever your circumstances or plans, move forward with MoneyHelper.

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