How much rent can you afford?

To figure out how much rent you can afford, you first need to work out what all your other outgoings and costs will be. Read on for an overview of the upfront and ongoing costs you need to take into account before deciding whether or not you can afford to move out or move home.

Estimate the cost of your rent plus bills

Renting a home involves more than just being able to cover your rent. Here’s a list of the most common household bills you should expect to pay as a tenant.

Council Tax, utilities and service charges

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

Ask the agency, landlord or previous tenant to provide you with estimates for these bills when you have a look around the property. Use the links below to check Council Tax and rates bands for specific addresses.

Other monthly costs that could affect how much rent you can afford

Bear in mind you will probably have extra monthly bills you will need to take into account, such as:

  • a TV licence (paid monthly or annually – visit tvlicensing.co.uk to find out how much this currently 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)

Draw up a budget of all of your costs

Of course, there’s more to life than just paying the bills connected with your home. You should also try to estimate how much you will realistically spend each month on other day-to-day expenses such as:

Need to improve your maths skills? Why not try the National Numeracy Challenge.

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

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’ve got 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 that 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.

If the figures are looking tight, visit our smart shopping page to get expert advice about saving money on bills at home and when out and about.

Watch our managing money video to find out the best way to keep on top of your money and manage your finances.

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.

Rental deposit

Upfront costs

Remember to budget for up-front costs such as rental deposit, agency fees and removal fees.

The rental deposit is typically four to six weeks’ rent. This is likely to be hundreds of pounds – and in some cases a thousand or more – so make sure you have these funds available before you commit yourself. You should get your deposit back at the end of the tenancy if there has been no damage.

If you don’t have the money for a deposit, contact your local council to find out whether there are rent deposit, bond or rent guarantee schemes in your area that can help you. But bear in mind that not all landlords and lettings agents will accept deposits in this form – you’ll need to ask.

Agency fees

Tip

Compare agency fees early on – for example ask what they will charge you for getting references and drawing up or renewing the tenancy agreement.

If you go through a lettings agency, you may be charged a range of fees. Some lettings agents have started charging unsuspecting tenants up to £600 in agency fees. The charges often appear to bear no relation to the cost of the work involved.

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

Removal or storage fees

Get local estimates for these. You can, of course, probably save yourself money by hiring a van and moving yourself if you’re up to it!

Furniture or furnishings

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

More money information if renting

For more money-related information when renting read our guides: