Renting your first home is an exciting prospect but it’s important you do your calculations and research beforehand to understand what you can comfortably afford. Stretching yourself to cover your rent and bills could leave you without the funds to cover other important or unexpected expenses, which can really put a strain on your finances.
Here, we’ve looked into how to calculate how much rent you can afford, to ensure you move into your property worry-free and ready to make a house a home.
Creating a salary rent calculator is as simple as making some easy calculations. It’s a little like creating a budget, but with a different goal. Here’s how to calculate how much rent you can afford, once you factor in bills and other expenses.
While it’s unusual for a landlord to include the cost of utilities in your rent, if you’re moving into shared accommodation, like a flatshare or shared house, then the existing tenants will already have a good idea what the bills cost and will likely ask you for one monthly payment that covers the lot. However, if your bills aren’t included, these are the ones you’ll likely need to consider, on top of the cost of your rent:
You may also need to factor in:
As well as your main bills, there will be other essential expenses you need to factor in on a monthly basis. These could include:
When working through this list, if you’re ever unsure of the exact amount it’s always a good idea to round up and overestimate. Once you have an amount next to each of the things listed, add this up to see how much your monthly expenses could cost.
Let’s use an individual earning £21,000 a year as our example:
Deduct the expenditure from the income, which, in this example, leaves the individual with £607.89 disposable income per month. It’s sensible to hold back a portion of your disposable income to cover emergency costs or for savings, so in this case, a comfortable rent amount may be around £400 per month.
Do these calculations above with your own estimated costs, to discover the cost of your everyday essentials and how much you can afford to spend on rent.
If you feel the money you have left won’t leave you with enough to rent the kind of property you want, you could look into ways to cut back on your everyday costs to free up more money. Perhaps you could reduce your clothes budget, or swap your car for a bike a few days a week to save on commuting costs.
When planning to rent, there are some upfront expenses that can be quite expensive so you’ll need to account for too – so it’s very important you find these before applying for any properties.
If you have bad credit, this can make it more difficult to rent a property, but it’s certainly not impossible. Take a look at our guide on renting with bad credit for more information.
You should read your tenancy agreement carefully
Ensure you understand all of the terms of your agreement and that there are no costs in there that you haven’t accounted. Do this before you sign anything. For example, your landlord may provide you with a television in a furnished rental property but you may still be liable for the cost of the TV licence.
Take pictures of the property when you arrive
Carefully examine the inventory your landlord or letting agent presents you with and check this against each room. If you notice any damage or stains that aren’t listed on there, take a picture and then notify them. This ensures you won’t be held responsible and penalised for the damage when you move out of the property.