What are letting agents like these days?

savefortherain

Do they still only rent to about 1/3 of total monthly salary? Would be a bit strange given that 2/3 is probably more common now, very little additional income for other things. A lot of people work just to exist, sadly.

Were rents always this high before the pandemic, in the greater manchester area, generally speaking it's

500 or less for a houseshare

500-600 for a tiny flat

600-800 for a better sized flat/terraced

800-1000 for a semi

1000 or more for a detached

Obviously there are some exceptions but this is what I am seeing, and what I am seeing is not a lot.

With house prices consistently going up, shouldn't rents in theory be going down? Maybe they have gone down, I've not been following the market.

Slithery

The usual rule of thumb is that your yearly salary needs to be 30x the monthly rent.

dimbo61

Why would rents go down if house prices go up ?
If a Landlord has to pay £180,000 for a 3 bed semi and can rent that property out for £750 a month  before costs that is less than 5% yield. 

dimbo61

According to the ONS ( office for national statistics ) the average wage in the Q2 of 2021 is £26,266.
So 1/3 of that monthly is £729 which should get you a 2 bed terraced house in Greater Manchester before the normal bills like Council Tax, Gas/Electric/Water/Broadband

Hedgepigs

I had always assumed it was calculated on earnings after tax and deductibles - apparently not. No wonder people end up running up debts.

savefortherain

Looking around other areas such as Wigan and Derbyshire, it seems there is a 20% reduction on my OP figures. Is Manchester becoming the new London where it's more expensive to live?

MaryNB

savefortherain said:

Do they still only rent to about 1/3 of total monthly salary? Would be a bit strange given that 2/3 is probably more common now, very little additional income for other things. A lot of people work just to exist, sadly.

If rent is 2/3 of your total monthly salary I would say that's very much unaffordable! When you add council tax, utilities, food, transport etc. you'd have very little left. I've always stuck with a cap of 1/3 of my monthly take home pay on rent. I live in Bristol where demand for rent is soaring (and it's been high for years to begin with). I've seen plenty of people looking on local groups looking for one bed flats when they should really be looking at houseshares given their budgets. I don't rent anymore but when I did I had a few housemates who moved from studio flats to houseshares because they didn't budget properly and initially rented places they couldn't afford.

Slithery mentioned that the general income requirement is gross salary = 30x monthly rent which is what I always had to meet as a tenant. That means many places won't let to you if the rent is more than 40% of your gross monthly salary. 

TripleH

savefortherain said:

Looking around other areas such as Wigan and Derbyshire, it seems there is a 20% reduction on my OP figures. Is Manchester becoming the new London where it's more expensive to live?

There does seem to be a grab by Manchester for power. A lot of development is going on and I've met a lot of people coming up from London to live. Sadly have seen some properties priced at £400K where the build quality is on a par with equivalent £400K in London.

savefortherain

MaryNB said:

savefortherain said:

Do they still only rent to about 1/3 of total monthly salary? Would be a bit strange given that 2/3 is probably more common now, very little additional income for other things. A lot of people work just to exist, sadly.

If rent is 2/3 of your total monthly salary I would say that's very much unaffordable! When you add council tax, utilities, food, transport etc. you'd have very little left. I've always stuck with a cap of 1/3 of my monthly take home pay on rent. I live in Bristol where demand for rent is soaring (and it's been high for years to begin with). I've seen plenty of people looking on local groups looking for one bed flats when they should really be looking at houseshares given their budgets. I don't rent anymore but when I did I had a few housemates who moved from studio flats to houseshares because they didn't budget properly and initially rented places they couldn't afford.

Slithery mentioned that the general income requirement is gross salary = 30x monthly rent which is what I always had to meet as a tenant. That means many places won't let to you if the rent is more than 40% of your gross monthly salary. 

Surely it depends on the individual though. I would sacrifice holidays and nights out right now for a nicer place to rent. Granted, that may change once the dust has settled after the pandemic.

It would be a shame if letting agents refused nice properties to people just because they didn't meet an arbitrary number, especailly if you can show you can afford it. I've not had to deal with them so I don't know, but I do know that tenants have a lot of rights these days so can understand they can be cagey on renting to non-professionals.

MaryNB

savefortherain said:

MaryNB said:

savefortherain said:

Do they still only rent to about 1/3 of total monthly salary? Would be a bit strange given that 2/3 is probably more common now, very little additional income for other things. A lot of people work just to exist, sadly.

If rent is 2/3 of your total monthly salary I would say that's very much unaffordable! When you add council tax, utilities, food, transport etc. you'd have very little left. I've always stuck with a cap of 1/3 of my monthly take home pay on rent. I live in Bristol where demand for rent is soaring (and it's been high for years to begin with). I've seen plenty of people looking on local groups looking for one bed flats when they should really be looking at houseshares given their budgets. I don't rent anymore but when I did I had a few housemates who moved from studio flats to houseshares because they didn't budget properly and initially rented places they couldn't afford.

Slithery mentioned that the general income requirement is gross salary = 30x monthly rent which is what I always had to meet as a tenant. That means many places won't let to you if the rent is more than 40% of your gross monthly salary. 

Surely it depends on the individual though. I would sacrifice holidays and nights out right now for a nicer place to rent. Granted, that may change once the dust has settled after the pandemic.

It would be a shame if letting agents refused nice properties to people just because they didn't meet an arbitrary number, especailly if you can show you can afford it. I've not had to deal with them so I don't know, but I do know that tenants have a lot of rights these days so can understand they can be cagey on renting to non-professionals.

It's about risk. Would you risk renting to someone who was stretching their budget to the max? Especially if it could take many many months to evict for nonpayment of rent, with no guarantee you'll ever get the full payment? Or would you favour someone who could comfortably afford it?

When I was renting I would often be in charge of advertising another room in the rental when looking to replace a housemate. Demand was so high I'd get about 30 responses in the first few hours. In Bristol landlords can easily choose to be fussy and I'd guess Manchester isn't much different. A landlord isn't going to sit down with each tenant and do an affordability assessment. 

If would argue if you're stretching your budget so your rental payments are 2/3 of your salary you cannot afford the "nicer" place and will have to make do with something more basic. That's a huge amount to spend on rent. Any financial advisory website would recommend that rent or mortgage payments are no more than 30-40% of your monthly income. I have no children, no car, had no debt when I was renting, I walk to work, I rarely go on nights outs  etc, I still limited myself to 30% of my take home pay when renting, did the same with my mortgage. 

BoE's FPC does a similar thing with mortgages. Most of us are limited by a 4.5x salary multiplier even if we believe we can afford more. 

savefortherain

May I ask what you spent the rest of your money on if you were limiting your rent to just a third and virtually having no social life haha (rhetorical question, not expecting an answer).

The numbers just don't make sense. Minimum wage salary is £17500 so the most people can afford is around 500 a month (apparently). How can anyone be working 40 hours a week on minimum wage, and expect to live in a house share? That is not a decent standard of living in the 21st century. Of course they could save the extra but that is never counted toward future rent, only earnings are.

It seems like the whole system is in need of big reform. And I don't want to hear any nonsense about the average wage being £26k in Manchester. Like everyone in Manchester is a Junior Doctor wandering around streets just begging people to let them give them a health check up because there are no surgeries they can work in due to the overabundance of Junior Doctors.