Moving out is exciting, but to ensure you’re able to do it successfully requires you to understand exactly how much renting a property is going to cost - from the upfront rental charges to further costs you may have not considered.
After all, you don’t want to get your hopes up, only to find you weren’t financially prepared for renting your own place. We don’t want that either, which is why we’ve outlined the main rental costs you’ll need to consider in this handy, simple guide.
Paying rent
Of course, the most immediately obvious cost of private renting is how much you’ll have to pay in rent. This should be your main concern before you even choose a property. Since rent is likely to be your biggest expense every month, you need to be sure of exactly how much you can afford.
Landlords will only allow you to rent their property if you can prove you’ll be able to make payments. Generally, this is done by seeing how much you earn per year, and is supported by your reference.
To figure out how much rent you’re able to afford, bear in mind that usually, landlords will require your yearly income to be equivalent to 30x the monthly rental rate.
Take this example: You find a property you like, and the monthly rent is £600. Based on the above calculation, you’ll need to be earning at least £18,000 per year (600x30) in order to rent the property.
However, the monthly rent isn’t the only cost you’ll need to think about.
Upfront costs of renting
Before you sign a tenancy agreement, you’ll need to make upfront payments that will secure the property ready for you to move in.
Rental deposits
Usually, you’ll have to pay a rental deposit of up to 5 weeks rent, which in some cases can be quite a lot of money. If you can, it’s best to have your deposit ready before you apply for a property - this way, you’re able to manage your finances in advance, without worrying about a large sum of money coming out all at once.
Rent in advance
In addition to your deposit, you might also be asked to pay some rent in advance - such as a month’s rent upfront. You may be asked to pay this if you arrived in the UK recently, have a poor credit rating, or cannot provide a guarantor or reference.
Not all landlords will ask you to pay rent in advance, but it’s worth factoring in the potential cost if you fall into one of the categories mentioned above.
Additional fees
As of June 2019, most tenancy-related fees are banned, and landlords (or letting agents) are no longer allowed to charge for things like administrative work, credit and immigration checks, or renewing tenancy contracts. If you’re presented with any fees you’re not sure of, be sure to question your landlord or agent on what they are, and why you should pay them.
However, there are some fees that you can be charged legally, so it’s worth bearing them in mind. For example, you might be charged a holding fee to reserve the property you’re interested in - though this should be refundable, and capped at no more than 1 week’s rent. At Ocasa Homes, we don’t charge holding fees for any of our properties.
Any potential charges that could occur within your tenancy should be laid out in your tenancy agreement with your landlord - including charges for lost keys, or early termination fees.
Once you know roughly how much renting is going to cost before you sign your tenancy agreement, you need to consider any additional costs that could arise before, during or after you move in.
Other renting costs to consider
Bill payments
Though this is technically something to consider before you actually move in, understanding how much your bill payments are going to cost you each month is key. Remember, you aren’t just renting an empty property - you’ll have to pay for your utilities (gas, water, electricity) usage each month, as well as council tax. If you want WiFi, and a TV license, you’ll have to pay for those too.
How you pay these bills depends on your rental contract, and whether bill payments are included in your contract or not. You can find out more information on what bills you’ll be expected to pay during your tenancy here.
Furniture
When looking for a property to rent, you’ll probably find some that are labelled “furnished”, some “unfurnished”, and others “partially furnished”.
Generally, furnished properties include most of the furniture you will need, with everything from white goods (a washing machine and fridge) to beds and couches. Unfurnished properties usually come completely empty - though they may also include some white goods, depending on the property. Part furnished accommodation is a bit vague, and could include a whole range of different furniture.
While none of these options are immediately the better choice, it’s worth understanding what furniture (if any) you may need to purchase before or after you move in. Furniture - especially big pieces like couches and beds - can become very expensive, so it’s best to determine how furnished you’ll need your property to be to remain within budget.
Repair costs
We’ve included repairs because although you may never have to pay for them, it’s worth keeping them in mind before you move into a property.
While larger repairs such as boiler breakdowns will be handled by your landlord, you’ll ultimately be responsible for smaller ‘repairs’ such as replacing light bulbs, or paying for things you accidentally damage or break.
Most landlords will also charge for lost door keys, as it usually requires the locks to be changed, which can be expensive. Though these things may never happen to you, it helps to be aware so that if they do, you’re somewhat prepared for the cost.
Tenants insurance
Tenants insurance (or rental contents insurance) is not something you’ll necessarily need to pay for, but you may want to consider it.
When renting a property, your landlord is ultimately responsible for all costs associated with keeping the building itself safe and in good repair. However, since you’re living in the property, all of your things are your responsibility. This means that if something is damaged or stolen from your home, it’s not your landlord’s responsibility to replace it, or compensate you.
Factoring tenants insurance into your rental costs ensures that if something happens (for example, a fire or flood), and your contents are damaged, you’ll be able to claim compensation to cover the costs of any replacements. It’s not a legal requirement, but could be worth considering - though you will have to check if the accommodation you’re living in is eligible.
Rental costs: how to decide what you can afford
Having an understanding of what rental costs you might face is the best way to figure out how to move out for the first time within your budget. But there is much more to renting than how much it will cost, and you’ll need to consider a whole range of other factors before you make your decision.
Check out our complete guide to private renting, to get everything you need to know about moving out for the first time - from starting your search for a property, right through to moving in.
