Is 40% of monthly income too high to spend on rent?

John1020

I'm looking at renting a property on my own for the first time, but I'm concerned about how much it will cost.

Post-tax, I earn £1500 a month.
I've found a place that I love for £600 a month, (edit: rates included)
Before utilities, that's 40%.

I don't have any dependants but I am renting this alone. Does this sound reasonable or should I look for a cheaper place? Thanks

jonnygee2

That's too high in my opinion. + council tax and bills at least 50% of your take home will be taken up.

Personally I set the limit at 30% including bills, even if that means living with other people.

need_an_answer

rent affordability calculators would usually suggest that to afford a rent of £600 per month your income should be £18000 per year.

most agencies will use an affordability calculator when assessing potential tenants for their LL's so the more disposable income you have above the basic calculation the better and the less likely you will be asked tp provide a guarantor or rent upfront.

If the calculations are tight what you may need to consider is what happens should your rent increase after your initial fixed term and has you salary increased at the same rate.


for eg would you find it difficult if your rent went up by £25 a month.

Factor in utilities and your other regular monthly outgoings on an income and expenditure sheet,that will help to give you an indication of affordability.
Budget in any insurances and the cost of food and your slush fund for going out/hobbies and basically you need a reasonable surplus at the end of each month.

If you've got a car then I would imagine that potentially the margins will be tight.

TamsinC

I think it depends where you live - my daughter is on £1500 a month but in London - she is in a house share with other professions and it's really cheap for the area of London she needs to be in at £665 a month. Bills are extra but all shared between four. She will manage easily - compared to living in a student house in London on a student loan she's rolling in it.

Cakeguts

It depends on what other expenses you have. For example if you don't have a car and walk to work or work from home then it will be possible if you are careful. However if you have a car on finance an expensive mobile phone and you have to commute to work then it won't be possible.

ReadingTim

Really depends on what your other outgoing are - car costs, student or other loan or credit card repayments, child maintenance etc, then there's discretionary spending, such as mobile phones, internet subscriptions, clothes, food, going out, sports and other hobbies, before larger things like holidays. And saving - assume you might like to save to buy somewhere yourself rather than rent all of your life?

ironmanjason

It really depends on where you live.. I live in London and back when I had my first job where I had post tax pay of about 1400 I paid about 450 on my room rent. It was a single room in a shared house with all bills included.. but 6 months down the line after I got a pay rise to get 2100 take home I moved to a single bed flat for 720.. We currently pay about 45% on rent on my pay alone but then since my wife works it seems ok to us.. our mortgage would take us to about 50% of my pay but again the high cost is due to living in the capital.. I was at one point looking to move north and I could see I could get a good house for 15% less than what I was paying for a small 2 bed flat in the capital..

But in general 40% is ok not ideal .. if you have other outgoings then that is going to eat away.. if you are saving then from my experience i would suggest 2 things - 1) increase your contribution to private pension if you have one and 2) aim at 10% income (pretax figure) going into savings

Magnus91

I was on a similar income and was paying £650 rent before bills. I'm quite a frugal person otherwise though and didn't have many other outgoings and could walk everywhere.

Saying that, I still had a healthy amount going into savings every month, so it wasn't like I was anywhere close to struggling.

The letting agency also needed me to pay 6 months rent upfront because they thought the rent was too high for what I could afford

lisyloo

I think it's too high.
London is an exception where public transport is cheap, you might not need a car and long term job prospect might make it worth it.

Rosemary7391

I think it depends on what you value. If having your own space instead of a house share is important then you'll probably manage fine if you think of it as one of the luxuries you pay for. If you take it for granted and want a car, lots of eating out, etc etc as well then the impact on your budget might feel more of a burden. Do your budget and be clear about the choices you're making and you'll be fine

Comms69

I'd say that it's fine.


Utilities will be around £60-80
Internet £25
Phone £40


Still leaves a very significant amount for shopping, expenses, travel etc.