How much of your income should be rent?

momo1103

Hi all!

Currently living in a shared house which is inclusive of all bills etc and has a fixed rent each month so really easy for me to budget.

Hoping to move in with my other half in the next 2-3 months and was wondering if there was a general rule as to what the maximum amount of your rent should be based on your income (excluding bills)?

i.e. maximum 50%/60%/70%? of income can go towards rent

..Hope that makes sense

G_M

Surely it depends on your lifestyle?
And whether you contribute to a pension or not.
And whether you have debts.
Or savings.
Whether you have kids.
Or pets.
Or a car/boat/helecopter.
etc

justme111

If your income is 1000 and you pay 50% for a rent you may struggle
If your income is 2000 and you pay 50% you likely to be ok
Only you know how much disposable income you need/want and what you like to live in.

momo1103

justme111 wrote: »

If your income is 1000 and you pay 50% for a rent you may struggle
If your income is 2000 and you pay 50% you likely to be ok
Only you know how much disposable income you need/want and what you like to live in.

Cheers, that makes sense.

j_yorks

Agree - I don't think there's a fixed rule. Mortgage in general shouldn't be more than 1/3 of your income so it might be reasonable to say that rent should be the same.

I am currently paying about 20% of my income in rent. 50-70% sounds an awful lot to me.

elverson

Specifically isn't it one third of your take home pay?

elverson

Also, some estate agents and referencing agencies use a rule that your gross income must be at least 2.5x the rent.

MortgageMamma

try using this to look at your current expenditure. It would be useful to look at your bank statements to get a more accurate picture of where and on what you are spending your money - as its your first home ask around the forums on how much people pay for utilities for a similar property and try and work off those assumed figures. https://budgetbrain.moneysavingexpert.com/auth/login

kinger101

elverson wrote: »

Specifically isn't it one third of your take home pay?

Not really; that's just a rule of thumb.

But even then, take home pay may or may not have had pension contributions deducted. So what's sensible for someone with an employer pension scheme might not be sensible for someone needing to stick 20% of take home pay into a SIPP.

There's no substitute for sitting down and working out what you can afford, and then balancing it with long term goals (save for deposit etc).

penguingirl

It depends where in the country you are as well- my brother and his partner rent in London and it is over 50% of their pay, whereas I used to rent in a northern town and we paid about 20-25% of our salaries.

mlz1413

try working backwards to find out what you can afford
example:
take home pay £1500
LESS: food/lunches £300
petrol / travel to work £100
mobile phone £25
personal money £100
so you have £975 left to pay everything with

you will need money for gas / elec / water / rates approx £350
you should have money for pension & life insurance £150
so you would have £475 to contribute towards the rent

the above are not exact figures as that depends where you live and what property you move into, but it gives you an idea of how to ensure YOU can afford your bills. Try completing the budget planner on this website to see what you do spend.