Are you thinking about renting a home? Then it’s important that you look into the costs involved to reduce the risk of any nasty surprises later down the line. In this blog, we’re letting you know how to budget for renting a home.
Before you begin your rental home search, there are a few things you should consider. These may include selecting a location to live in, thinking about how many rooms you may require, and much more, alongside of course considering the costs involved.
Carefully consider your salary
If you’re thinking about moving out and paying rent, you really need to take the time to assess your financial situation and ensure it is the right step. It is also worth setting a budget of what you are willing to pay in monthly rent. This can then guide your search process.
Generally, renters are usually advised to spend no more than 30% of their gross salary on rent. However, this can vary significantly depending on your income. You need to ensure that you have enough money left over to pay for bills and other financial commitments that you may have.
By ensuring you spend no more than 30% on rent payments, you can relieve pressure on other areas of living, reduce the risks of not being able to pay your rent on time and get used to budgeting with ease.
This is not an enforced percentage for rental costs, but it works well for most people, as it provides balance to their lifestyles.
The upfront costs involved
It’s important to be aware of the initial costs involved in renting a home. Many rental homes will require a holding deposit and a security deposit. In line with the Renters’ Rights Act, a holding deposit cannot be any more than one week’s rent. A security deposit can be no more than five weeks rent, or six weeks if the annual rent is more than £50,000.
When tenants have a security deposit, it must be secured under a government scheme within 30 days. At the end of the tenancy, this money may be returned to the tenant in full or some of it may be used to cover any damages to the property, excluding wear and tear.
Prospective tenants should also factor in any additional costs of moving, such as using a moving van company.
Remembering to budget for utility bills and other recurring expenses
Bills are something that typically are in excess of your monthly rent, and it’s important to have some money saved up to cover these. When you rent a property, it’s likely that you’ll need to pay for council tax, water, gas and electricity bills. You will also need to pay for Wi-Fi and potentially other services.
Renters are also encouraged to pay for content’s insurance, which is nothing to do with the landlord themselves, who will have building’s insurance. You’ll also need to think about other essential expenses, such as living costs and parking fees.
What you should do if you’re thinking about renting
If you’re thinking about renting a home, then it’s really important to sit down and have a good look at your finances. Think about how much income you get, and consider whether 30% is an appropriate amount that you would be happy to spend on rent. Don’t forget about the other bills and monthly expenses.
It would be a good idea to start tracking your income and spending for the next few months, so that you can closely monitor your outgoings. It’s always good to save as much as you can so that you have a buffer. You can use an online budget calculator to gain a better understanding and help towards managing finances effectively. You may find it helpful to start building an emergency fund into your monthly budget.
We recommend that you look into the local rental market and think about your monthly income. This will give you a good idea of how much rent you are willing to pay for your first rental property. Read our blog on common renting mistakes and how to avoid them.
Intus Lettings is a nationwide letting agency offering a local touch. We work closely with tenants to find homes that meet their needs. If you’re looking for a rental home, don’t hesitate to contact us. We will be more than happy to help. We hope this blog has been helpful on navigating rent and living expenses.
