Before you start looking for your new rental home, it’s important to have a good understanding of your finances first. This way, you can gauge which listings you can afford, and how the monthly rent will balance out with your lifestyle and budget. Here are a few easy ways to prepare your finances for your new rental home.
Work out your budget
So, you’ve decided you can afford the monthly rent on a property, but what about everything else? It’s important to map out all your monthly costs and subtract them from your monthly income to see if you can live comfortably while paying bills. For example, the average rent in the South East per calendar month is estimated at £1,205, and £1,061 in the South West, but there are ever growing numbers of properties listed between £500 to £1,000. It makes sense to have a roommate to split the monthly cost and ensure that you can secure a property in a major economic hub where career opportunities are endless.
Experienced tenants would recommend putting around 30-45% of your monthly income towards rent, as then you’ll have some breathing room for your monthly spending. No one wants to work just to pay bills, so make sure you have enough left over to spend on yourself.
Weigh up the monthly bills
As a tenant you will need to pay:
- Council Tax
- Broadband and phone bills
- TV licence
- Rent
You will most likely also have to budget for gas, water and electricity, although some landlords include these in the overall rent.
It’s always handy to ask about bills at a viewing, whether it’s current residents of the property, the landlord or an agent, they will be able to point you to which providers to use and a rough figure of what you may spend each month.
Paying bills is a big responsibility and if you’re living with someone else, make sure you have one appointed person to keep on top of things. Most roommates will use mobile banking or shared accounts to make bill splitting simpler, it also makes sense to keep a group chat going or a whiteboard in the kitchen, so that everyone is in the loop.
Don’t forget the deposit
Rental deposits vary across the UK depending on location and value of the property, but as a general rule, if the annual rent is less than £50,000, your deposit will be no more than five weeks’ rent.
If the annual rent exceeds £50,000, your deposit will be no more than six weeks’ rent.
You’ll need to make this payment before you move in. The deposit is important if you cause any damage to the property or even fall behind on rent, as the landlord can take out of your deposit to cover it. If you pay your rent on time and you leave the property in excellent condition, you can get the full sum of your deposit back at the end of your tenancy, as the landlord or letting agent legally has to put your deposit in a government protection scheme.
It’s of course advisable to start saving up for a deposit as soon as possible, although it’s a smaller sum than a house deposit, it can be a big hit to your bank account if you pay it all on one month’s wage.
Other things you may be paying for:
- Contents insurance – Some landlords will require their tenants to take out contents insurance to cover both themselves and their belongings during the tenancy, other landlords will recommend it but allow their tenants to decide.
- · Parking fees – Particularly for city locations, you may have to rent out a monthly parking spot near your home.
- · Cost of moving – Moving in and out is never free, you may have to pay for furniture moving services, van hires, professional cleaners and tip runs.
- · Guests – The monthly price of your utilities will depend on how much you use them. If someone comes to stay, you could end up paying for twice your usual utility usage.
Looking for your first rental home?
Contact your local Parkers branch today to speak to our friendly staff for more advice on the letting process.
