How do I calculate how much rent I can afford?

AJayneC

Hi!

I have a simple question: How do I calculate how much rent I can comfortably afford? I will be renting alone.
Are there any good pieces of advice or unwritten rules about the percentage of income I should spend on rent?

I also assume this question isn't independent of how much I can afford to spend on bills. Any information about utility bills for a one/two bedroom flat with single occupancy would be helpful, but I understand this might vary a lot.

Thanks!

Flibsey

it depends on where it is too.
and local council tax fees as they're a big chunk too.

BitterAndTwisted

If you have no idea of local rent-levels or how much is costs to run a home on your own a fair guess would be that you probably can't afford it. The usual route out of the parents' home is to either find a spot as someone's lodger or go into a flat or house-share.

Do you think you could find about £200 a month plus rent as an absolute minimum and still be able to have a half-decent life?

AJayneC

I'm not sure why you think I should house-share or lodge as I already stated I am living alone. I am earning about triple the minimum wage.

I have just graduated, hence I haven't just left my parents either, and I don't need advice on my life path.

I know exactly how much it costs to rent a flat in the area I'm looking, although that wasn't my question.

What I want to know is how do I calculate/estimate how much I personally can afford, from the salary I will receive?

HapPea

35% of take home pay is the old fashioned guide for Mortgage Payments so the same could be applied to rent.

Though one thing to think about is the money left over. eg 35% of £1000 leaves only £650 for all bills +travel +food. but 35% of £2000 leaves £1350 which gives more room for emergencies/holidays etc.

purple.sarah

I heard it should be about 1/3 of your monthly income after tax.

HappyMJ

Maximum of 40% of gross pay to even to be considered by any agency.

You must earn 30 times the monthly rent as annual salary. Rent £400 a month means you must gross £12,000 a year or £1,000 a month.

If you are on a low wage you can also get housing benefit but if you earn 30 times the monthly rent anyway then you can rent the property based on your salary then top it up with housing benefit at a later date once you have moved in.

G_M

Best way is to work out how much monthly income you have (hint: your salary statement will tell you).

The work out how much you need to spend on bills, food, clothes, travel etc etc.

The difference between the two is what you can afford on rent.

AJayneC

Thanks! All of these answers are great. I'm glad I asked.

It seems there are two methods; do I prioritise my housing or my lifestyle? So I shall calculate the 30% and compare it with the figure I get after working out my monthly outgoings and seeing what's left.

If anyone has any more insight please post, the more prepared I can be the better.

giddypenguin

Your question is backwards - Other people can't tell you what you can afford. What are your monthly outgoings now? Can you reduce these? Do you want to? Do you want savings? Only you can work out how much you can afford to live happliy.

R_P_W

Hi, might be worth sharing what the typical monthly rent is in your area for the type of property you want/need along with your salary?

I imagine most areas have a pretty broad range of rents (i.e. you can go bargain basement and rent a not very nice property in a not very nice location, or to the other extreme you can pay a lot of rent either for a larger/nicer property in a nicer area).

If it was me I would start with what you take home each month and deduct council tax, utilities, contents insurance, tv licence, food, socialising/entertainment, savings - that might give you an indication on whether you are being a bit optismistic about the place you want or you might even find you can afford a bit more to live in a slighty better place.

Its all about what is a priority for you. It would seem sensible that you dont want to pay more than you need to in rent, but equally you dont want to make too many sacrifices and live in a hole either.

25-35% of your take home pay though does sound reasonable to me and is something i would personaly expect and be comfortable with.