How To Calculate How Much Rent You Can Afford

Person Holding A Key

Before you start looking for a place to rent, you’re going to want to better understand exactly what you can afford to spend on rent every month. If you’ve never rented before, or you just want to get a better handle on your budget from month to month, though, you may wonder exactly what you should spend on rent. While some experts will tell you 20% of your monthly income is the right number and others will tell you that closer to 30% of your paycheck should be spent on housing. What’s the right number, and how do you meet your budget while still finding a fantastic space? This How To Rent guide can help you make those decisions!

What is the Average Rent UK Tenants Pay?

As you try to decide on the right number to meet your needs, it may make sense to understand exactly what the average rent UK citizens pay. A recent RightMove survey has shown that the average rent in the UK from private landlords has hit an all-time high across the country, jumping by as much as 20% in some cases. Recent studies have shown that the average UK rent outside of the London area has hit £1,126 per month for most people. In London, however, that number is quite a bit higher. In London, the average rent is now £2,257.

The reason behind the increase in number on the average UK rent isn’t just the economic crisis the UK is currently facing, but several other factors as well including an increase in the demand for rental properties. According to a recent Zoopla study, the demand for rental properties is more than 70% higher than it was before the pandemic, and that’s creating an issue for virtually everyone looking for a fantastic place to live.

How Much Rent Can I Afford? Building Your Rental Budget

So, how do you even begin to build a budget for what you can afford when it comes to monthly rent? Start by gaining a better understanding of what you’ll have to spend each month outside of rent. Think about your transportation costs to and from work.  Consider your food costs, as well. You’ll need to think about not just the cost of food for your new flat or house, but also what you spend from week to week grabbing lunch at work or going out on the weekend. In addition to those monthly costs, you’ll want to factor in the costs of any other outstanding debts you may have like student loan payments. If you have monthly membership payments to the gym or services like Netflix. Remember that it can be fairly easy to overlook small expenses like takeaway coffees on Friday mornings or even pet insurance, but you want to be as accurate as possible. If you are paying into a pension fund, you’ll want to add that to the mix too.

As you budget, it may be helpful to gather all of your paperwork so you know exactly what you’re spending each month and where you’re spending it. You want to try to make sure you’re listing absolutely everything, and if you must estimate a figure, it’s best to overestimate rather than underestimate that figure.

Once you’ve added up what you have coming in each month and subtracted what you have going out, you have a basic figure for rent. Keep in mind, though, that the number you see on the page shouldn’t be your total figure for rent. Wondering why? In the next section, we’ll talk a bit more about the other expenses you can expect to encounter that work with rent but are actually outside the payment you might make to your landlord.

There are a few rent calculator options online that can handle all of this for you, but as helpful as a rent affordability calculator can be, they can also be misleading at times, so creating a total budget can be a better choice.

Think About Other Rental Costs

Outside of the monthly payment to your landlord, there are other costs involved in renting a flat or a house. You’re also likely to encounter Council tax, water bills, service charges, and gas and electricity bills. Additionally, you may wish to pay for a TV license, a landline phone, contents insurance, a television subscription, and broadband internet. How can you figure out what all of these items might cost you? There are a few different ways to do it.

  • Ask Your Landlord: For some costs, you may be able to talk to the landlord for estimates on the bills. Typically your landlord will know what you can expect to pay in Council tax and water bills, as well as other utilities like gas and electricity. He or she should have a fairly firm list of any service charges you will encounter as your rent, too.
  • Talk to Previous Tenants: Many landlords will be able to give you a list of previous tenants to whom you can speak for references on the flat or home you’re considering anyway, and when you go to speak to them, ask them for estimates on those extra costs. They may have a better record than your landlord did.
  • Do Some Online Research: You may be able to get many of the cost estimates you need online. Councils and service providers often publish a tenant fee band so you can see exactly what you’ll be spending.
  • Speak with Service Providers: When it comes to some of the extra costs like TV licenses, landline phones, and broadband internet, it’s likely best that you speak with the service providers themselves. They should be able to tell you more about their service tiers and what they cost. They should also be able to tell you whether payment for those services is expected on a monthly or quarterly basis.

As you look at the bottom line number on the page you have available for rent PCM, you’ll want to add these costs in with that number to better get an accurate picture of what you have available.

Understanding Rental Ads

Once you have some numbers in mind, it’s time to start shopping for the right property, and if you’re like most people, you’ll likely begin your search with the adverts themselves. You can find these in newspapers or online with search terms like “renting near me” or “private renting near me.” If you’ve never looked at house rent UK ads or those for flats, you may be unfamiliar with the terminology involved, so it can help a bit to know what you’re looking for. A studio is a flat that has a combined area for living, dining, cooking, and sleeping. It’s essentially one open-concept room with a separate bathroom. A flat share or a house share is a space for renting a room inside a flat or a house and having a common living and cooking area with others. A terraced space is a property that is attached to a house. A maisonette is a home that has been split into more than one flat, but each has its private entrance. A semi-detached home is attached to another house on one side but not on the other.

In addition to deciphering the terminology, you’ll also want to scan the ad for your must-haves. What are you looking for in terms of parking? How many bedrooms and bathrooms are ideal for your living situation? Are you looking for a place that is pet friendly? Are common areas such as the garden okay?

How Close Should Your New Space Be To The Tube Or Train?

In most cases, the PCM rent will be listed in each advert. What does PCM mean? Rent per calendar month. Essentially, it tells you what you’ll pay each month.

Take the time to read through each advert for rental property UK carefully, and consider the photos if they’re attached to the ad. You’ll look at several properties, and you don’t want to exhaust yourself in the property, so make sure it has what you’re looking for before you ever contact the landlord for additional information and to book a showing.

As You Prepare to Shop, Consider These Things

Once you have seen at least a few rental ads that seem like they might be the ideal place for you, it’s time to start viewing properties. Before you shop, there are a few things you may want to consider.

  • Find out if you qualify for the Housing Benefit or Universal Credit. If you do, you may be able to get help with part of your rent, or even all of it in some cases. If you’re working with a private landlord, it’s possible to get the Local Housing Allowance Rate to help cover the cost of the rent. Check at gov.UK to learn more about both programs.
  • Consider the area in which you want to live. If you’re commuting to school or work each day, you’ll want to be in a certain area to ensure your commute isn’t too long. Don’t be tempted by great adverts that make for an incredibly long commute day after day.
  • Grab your documentation. You’ll need proof of your identity, your immigration status (if applicable), your credit history, and proof of employment. Remember that landlords in the UK must check to ensure their tenants are at least 18 or older and have the right to rent a property.

As you shop, there are a few other things to take into account.

  • Find out whether the landlord or letting agent is charging additional fees for setting up a tenancy agreement. There are laws in place to prevent that, and while some fees are permitted – you can be charged to reserve a property, but it cannot cost more than a week’s worth of rent – others simply are not, so know your rights.
  • Understand what the deposit is going to cost you on top of rent prices. Since 2019, there is a cap on the deposit that tenants are required to pay. If the rent is less than £50,000 per year, they cannot charge you more than five weeks of rent for a deposit amount. The deposit also has to be refundable.
  • Know how long the lease agreement lasts. Landlords have to allow you to stay for at least six months, and most offer a term between six and 12 months, but you could negotiate something longer if the landlord is interested. You could also agree to a tenancy that works on a month-to-month basis after the initial six months. Understand both what you want and what the landlord is offering.
  • Understand whether you’ll need a rent guarantee. Some landlords will ask you for a guarantor, so find out whether that will be a requirement in your case.
  • Take a closer look at whom you’re renting in the UK. In some cases, it might be a private landlord. If so, you’ll want to select someone working through an accreditation scheme. These offer classes and help for landlords so they can fulfil their legal responsibilities. You may also be working through a letting agent, and if so, they must be a member of a redress scheme. Be sure to find out which one so you can know where to turn should a dispute occur during your tenancy.
  • Look into the safety of the property as well every time you take a look at a space. You want fixtures and fittings that work well, smoke alarms, carbon monoxide detectors, and a property that generally seems healthy and free from anything that could create serious harm for you and those with whom you live.
  • Be sure you identify the landlord directly if you’re not working with him or her. Landlords must legally provide you with their name and contact information. It may also be worth it to ask whether the landlord is the owner or leaseholder if you’re renting a flat. If they are a leaseholder, find out if the freeholder has agreed to have the flat let out. If the landlord is currently under a mortgage company, make sure the company knows and has agreed to the letting, as if not, you may have to leave the property sooner than you expected.

How To Rent AND Save At The Same Time

If, after you look at your budget, you’re a bit concerned about how much you can afford in PCM rent, it’s important to note that there are a few different ways to save on the rent itself. The first is to live with more than one housemate. When you live with others, you’ll have shared living spaces, but you’ll also have others with whom you can split the rent. This usually works best when you rent a home instead of when you rent a flat a UK city have to offer, but you can make it work with a flat. Houses to rent in the UK tend to be bigger, which makes it possible for more than one person to live there comfortably. What’s more, though, is that flats for rent from private landlords often have additional regulations about the number of people who can live in them. A UK house rental, on the other hand, may have fewer restrictions.

If that’s not an option, you could also offer to make a few repairs to the place for your landlord in exchange for a lower rent. For example, perhaps some of the spaces need painting. By offering to tackle some of that work on your own, you could negotiate a lower overall bill. If you plan to do this, though, make sure that you’ll get it done and that you’re capable of undertaking the work that you’ve promised to do.

You may also want to consider the kind of place you’re looking for. If you’re only considering furnished places, stepping down to an unfurnished space or a partly furnished space could help you save money each month. There are lots of websites and charity shops where you could find great furniture for your new space, too.

Finally, be willing to negotiate. Landlords often don’t have a fixed price on their rental unit, and if you’re willing to do a bit of tough negotiation, you could figure out how to get the same place for less money.

When You’ve Found A Place

Once you know where you want to live, there are several other things you should check. First, take a look at the tenancy agreement. You have the right to a written tenancy agreement, and you should carefully read and understand that document before you ever sign it. If you have any concerns, be sure to look for advice from a solicitor or another individual before you sign it. You can walk away before you sign without losing your holding deposit. The agreement should include the names of everyone involved, the cost of the rent and how often it should be paid (whereas where it should be paid), the deposit amount and how it will be protected, and the details of how the deposit can be withheld.

You should also get an inventory from your landlord. Work through it together before you move in, and make certain you take photos. That can help prevent any disputes down the road about the condition in which things were left when you began your tenancy. If you’re happy with the inventory, both of you should sign it, and you should both have a copy.

Take your meter readings when you move in, too. You’ll want to take a photo with the meter reading, the date, and the time to be sure you are not responsible for the costs the previous tenants left behind.

The landlord should provide you with quite a bit of paperwork, too, including a gas safety certificate, deposit paperwork, the Energy Performance Certificate (or EPC), an electrical inspection record, and evidence that smoke alarms and carbon monoxide alarms are in working order.  If you do not receive that paperwork, you’ll want to ask for it before you ever move in.

What If You Can’t Pay Your Rent

After you’ve moved into your new place, one of the key expectations is that you can pay your rent on time, but if something happens and suddenly you realise that you cannot make your rent payment, there are a few things you can do. First, take a hard look at your budget. If there are cuts you can make so you can offer at least partial payment to your landlord, make them immediately. Rent is far more important than your gym membership, so do what you can to save money.

The next thing you should do is immediately talk to your landlord. When you explain to them that you can’t make the next month’s rent, tell them why. Tell them when they can expect that money, and how the two of you can work together to get the issue resolved. If, for example, you just lost your job but you’re in the process of interviewing for a new one, your landlord might be incredibly understanding.

No matter how understanding your landlord might be, he or she will have to send you a formal demand letter to request payment. It will make clear that legal action is a possibility. You don’t want to panic at this point. This is a standard procedure for most landlords, and they are legally obligated to do so.

If you still haven’t made your payment 14 days after the rent is due, your landlord may choose to send a letter to your guarantor if you have one. Communicate with your guarantor before this happens. Don’t let them be surprised by the situation in which you’ve found yourself.

Once you’ve gone a full month without paying rent, you can expect to get a Section 8 notice. The landlord can apply to reclaim their property when you have officially not paid rent for two months.

At any point in this process, you can work with your local housing authority, Citizens Advice, or Shelter to help figure things out. You may also be able to contact Civil Legal Advice for legal aid. Any of these steps can help you get back on track and protect the place in which you live.

How Much Can I Afford To Rent? It’s Up To You

Finding the right place to rent at the perfect price can be complex, but it is possible. By setting a budget at the beginning and using a rent calculator UK websites offer, you’ll be able to find a place in no time. Then just scan the ads to find the perfect house or flat to rent in UK towns and rural areas, and you can move in quickly.

We are proud members of...

  • NAPB
  • RICS
  • The Property Ombudsman
  • Trading Standards

We are proud to be the most regulated property buyer operating in the ‘Quick House Sale’ industry. We are an active member of the NAPB (National Association Of Property Buyers) and are RICS regulated, which means you can have every confidence of selling your home with us quickly & easily.