How much rent can you afford?

To see how much rent you can afford, you first need to add up all of your other expenses. Read on for an overview of the upfront and ongoing costs you need to consider before deciding whether or not you can afford the rent.

• Estimate the cost of your rent plus bills
• Draw up a budget of all of your costs
• Don’t forget the upfront costs
• More money information if renting

Estimate the cost of your rent plus bills

Renting a home involves more than just being able to pay your rent.

Here’s a list of the most common bills you should expect to pay as a tenant.

Council Tax, utilities and service charges

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

Ask the agency, landlord or previous tenant to give you 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:

• Check Council Tax bands via the GOV.UK website (England and Wales)
• Check Council Tax bands in Scotland
• Find out about rates for rental property in Northern Ireland

Other monthly costs affecting how much rent you can afford

Bear in mind you will probably have extra monthly bills to pay, such as:

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

You should also try to make a realistic estimate of what you’ll spend each month on other day-to-day expenses such as:

• Mobile phone
• Food/clothes
• Travel/car insurance
• Childcare/maintenance
• Gym/hobbies/nights out
• Loans or credit card repayments

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 have 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 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.

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

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, ask your local council to find out whether there are rent deposit, bond or rent-guarantee schemes in your area to can help you.

But bear in mind not all landlords and lettings agents will accept deposits in this form – you’ll need to ask.

• Read about rent deposit, bond and rent guarantees schemes on the Shelter website
• Get contact details for your local council on the GOV.UK website
• Check out this helpful renting checklist on the GOV.UK website

Agency fees

If you go through a lettings agency, it might charge you a range of fees.

Some lettings agents have started charging unsuspecting tenants up to £600 in agency fees.

Often the charges do not seem to relate 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 probably save yourself money by hiring a van and doing the job yourself, if you’re up to it!

Furniture or furnishings

If you’re moving to 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 if you’re renting, read our guides:

• Your legal and financial responsibilities when renting.
• Rent arrears and problems paying your rent.

This article is provided by the Money Advice Service.