Can You Afford to Rent?

When many people leave their parents’ home for the first time, they move into rented accommodation. Sounds simple, right? You find somewhere you like, sign a contract and start paying your rent, don’t you? Well, that’s partly true – but there are other costs that you need to take into consideration before you can fly the nest!

Deposit

Although most people realise that you normally pay your first month’s rent up front (i.e. the day you move in), you might not know that you also have to pay a substantial deposit before the keys are handed over to you. Deposit amounts vary from agent to agent, but are normally at least one and a half months’ rent.

The good thing about the deposit, of course, is that it is refundable at the end of a tenancy if you leave the property in the same condition in which you found it. Even so, stumping up rent plus deposit in one month can often be tricky for would-be tenants – you might be looking at a figure of around £2000 in total for a city centre apartment in Manchester (although it could be more or less) – so it’s worth ensuring that you have saved a decent amount before starting to look.

Referencing Fees

Before you even get to the rent and deposit, however, you’ll usually be asked to pay a fee for referencing and administration. This can be called different things by different agents; it might be referred to as the referencing fee or holding fee. The money pays for the references that are conducted to check that you are creditworthy, that you can afford the proposed rent based on your salary and that you do not have any previous history of being a unsuitable tenant. The money is also put towards drawing up the tenancy contract and all the other documents that are needed for your let. It’s worthwhile bearing this in mind when you start to search as the fee normally amounts to a few hundred pounds. It’s also a non-refundable fee, so you won’t get it back if you pull out of the let for any reason.

Check In/Check Out Fee

It’s become increasingly common for landlords and agents to charge a fee for checking you in and out of the property at the start and the end of a tenancy. This charge pays for a property professional to check the property when you move in and when you move out, compiling a full inventory of all the items in the property and their condition. Photographs are taken and written records are made, thus protecting you from being charged for unnecessary damage etc. when you leave the property. This fee also often covers a basic clean at the end of the tenancy to get the property back to scratch before the next tenancy begins (although it doesn’t mean that you can leave without cleaning your property; the costs of removing excess dirt and mess will be charged from your deposit, generally speaking). Like the referencing fee, the check in/check out fee (called a ‘cleaning fee’ by some agents) tends to be non-refundable.

Contents Insurance

Many reputable agencies will insist that you obtain contents insurance for your belongings when moving into a property. This is because you need to be protected if something happens to your items while you are renting – for example, if things are stolen during a break in or if belongings become damaged through no fault of your own. This is because you cannot expect a landlord’s buildings and contents insurance to cover your items – having your own policy thus helps to avoid disputes. Depending on the value of items that you own, contents insurance can be around £20 a month.

Affording to Live!

Once you have paid your rent, deposit and any other relevant fees, you still have to be able to survive! This can be a bit of a shock if you have been used to living at home; having several hundred pounds a month leaving your account just in rent leaves a large dent in your pocket before you’ve even factored in food, bills, transport and, last but not least, leisure activities! This is why the affordability checks that are carried out as part of the tenant referencing process take the cost of living into account when working out what you can afford to pay in rent.

Don’t forget, there can also be unforeseen costs associated with renting, such as maintenance or repair bills. Although you wouldn’t be charged, of course, for damage that wasn’t your fault (such as wear and tear or a routine boiler breakdown), you might accidentally break something during your tenancy, meaning that, unfortunately, you’d have to pay for that item to be fixed or replaced. It’s always worth putting some money aside each month for situations like this so that you’re not caught out by an unexpected invoice.

Not sure about what you can afford based on your salary? As a general rule of thumb, you need to be earning two and a half times the agreed rental price. Think you might struggle? Many new tenants club together with friends to share the cost of a rental rather than trying to go it alone – particularly in the first few years of renting.

At Julie Twist Properties, we’re used to helping out tenants at all stages of their tenancy experience – whether you’re a first timer or a seasoned renter! Take a look at our property pages to see what we have on offer.