Figuring out how much to save before renting involves considering things like rent, deposits, moving costs, and furnishing expenses. Don't stress though, with some smart planning and saving, you'll be ready to take that big step into your new home in no time!
How much should I save to rent a house or flat?
Whether you’re moving out on your own or moving in with friends, before you start searching letting agents’ websites and classifieds, you’re probably wondering: “How much money should I have to rent an apartment?” The truth is that it will likely be considerably more than the monthly rental cost. The good news is it’s fairly easy to figure out.
To work out how much money to save, consider things like a deposit, energy bills, internet and furniture. You may be able to find rental agreements that are “bills included”, which can change your calculations a little bit, but these are the main things that you might want to think about when planning to move into a rental property.
Rent
While rent itself isn’t the only cost you need to be aware of when moving into a new property, it is the important one. Remember, rent is an ongoing obligation, and is often your biggest expense. Check the rental listing to make sure it’s affordable for you. We’ve got tips on budgeting later in this article, which can help you.
The average monthly rent in the UK is around £1,200 and this cost will typically be about 30-45% of your income. That’s why finding a property with affordable rent can help you balance your finances. It’s important to be realistic and not overstretch yourself because you may have other things chipping away at your income, like energy bills or credit card payments.
When looking at rental listings, it’s useful to get your head around the difference between monthly and weekly rates. While monthly rates are fairly straightforward, weekly rates aren’t always multiplied by four to give you a monthly cost. To get an accurate monthly cost from weekly rental listings, multiply it by 52 (weeks in the year) and divide by 12 months.
Another useful hint when it comes to paying rent is that you will normally be expected to pay in advance, not in arrears. That means you’ll pay your first rent on the day you move in, to cover the upcoming month, rather than paying at the end of each month.
Check out this blog post if you’re wondering whether it’s better to rent or buy a house.
Deposit
The other cost that is important to remember when calculating how much money to save before renting an apartment is your deposit. Your deposit is paid to your landlord and is usually equivalent to between one and two months’ rent. Deposits can be refunded at the end of your tenancy depending on what state you leave the property in.
Some landlords and letting agents might also charge you a security deposit to hold the rental property while they check your references. Not to worry though as this cost can be refunded before you move in, once the checks are completed or it can be added to your standard deposit when you move in.
Bills
When you’re thinking about how to save for a rental property, you may also want to think about general bills and living costs. Even if your rent includes bills, it might not include everything. To be sure, the best thing to do is to speak to your letting agent or landlord to get a clear idea of what’s included or, if bills are not included, how much you can expect your outgoings to be.
The sort of bills and living expenses that you might want to consider are:
- Utility bills (gas and electricity)
- Water rates
- Council Tax
- Internet service
- TV License
- Contents insurance
- TV packages and streaming subscriptions
Other expenses
Other expenses that you might need to include in your budget will depend on the property. For example, if your home is unfurnished, you might need to factor in furniture essentials, like a sofa or a bed. Unfurnished properties often have bathroom fittings and white goods, like a fridge and oven, so you won’t usually need to buy absolutely everything.
Even if the property is furnished, you’ll probably want to buy some new home comforts like bed linen, cutlery and crockery, lamps and towels. Loading up your car at the shops can be a fun way to start nesting, but it’s easy to get carried away, so maybe go with a budget in mind and stick to it. Remember, you can keep your furnishing costs down if you go secondhand.
Create a budget
By using the above hints and tips you’ll hopefully be able to get a good idea of how much money you should save before renting an apartment. Now, let’s work out if it’s realistically affordable or whether you might need to make some changes to your plan. To do this, you can start with a budget. Don't fret — although it may sound daunting, it's actually quite simple.
The first thing you need is a clear idea of your income, that is how much you earn every month after tax. But remember to include anybody’s income who is going to be paying rent and living with you, or at least work out your share of any costs if you’re going to have any roomies.
Next, outline all of your expenses. That will include all the new outgoings you’ll be expecting to pay plus anything that you already pay out every month. Separate these expenses into essential and non-essential categories. Your rent and your bills fall into the essential category, but going out and buying luxury items comes under non-essential.
Now you have your income and expenses, put them next to each other to see how they stack up. You could try the 50/20/30 budgeting rule. This breaks your income into percentage chunks: 50% for essential expenses, 20% to go towards your goals like debt repayments or savings, leaving 30% for your non-essential expenses.
What’s great about this budget is that it gives you realistic targets for your spending, helps you to understand your affordability, and also - because it is in percentages - it grows and shrinks with your income. With your budget you can work out how much you think you can afford to pay each month for your rent, and also how long it will take you to save up towards your first rental property.
Check out this blog post for more budgeting rules that may suit you better.
Grow your credit score
When understanding how to save rent and deposit payments, your landlord will also often want to check that you are who you say you are and that you are likely to be able to afford your payments. And that means checking your character references (from an employer for example) and potentially even your credit history.
Your credit score is a number that helps you understand your creditworthiness. This can impact how you appear to prospective landlords. Your credit rating also lets them know you are who you say you are. It’s calculated by the top three credit reference agencies (CRAs) in the UK: Experian, Equifax and TransUnion. Generally, the higher your credit score the more likely they are to enter into a rental agreement with you.
Not only can your credit score help you to secure the rental of your dreams, but it can also help you successfully negotiate the best deals on mortgages and loans, which can save you £1,000s in the long term.
If you want to make sure your credit score is as healthy as possible, why not get started with Loqbox? You can even build your credit history after you’ve moved in just by paying your monthly rent.
Increases in your credit score are not guaranteed.
If you want to find out more about whether rent can affect your credit score, read more in our blog.
.png)
.png)
.png)
.png)
.png)
.png)
.png)
.png)
.png)
.png)
.png){kind=small}