Affordability and budgeting for renters
Rhys Owen, Senior Property Investment & Market Advisor, provides a few tips to help gain a better foothold on affordability and overall budget when renting a property...
One of the most important skills when renting - as well life in general - is comfortably managing to afford your lifestyle. For many tenants the rental payment is the biggest monthly outgoing from their bank account.
Whether you’re new to renting or looking for ways to ease the build up of financial burden, learning what it takes to manage rental payments along with the rest of your finances can significantly reduce stress levels and make everything far easier to keep on top of.
To achieve this it’s important we improve our budgeting skills - something that doesn’t come naturally to everyone. Fortunately, we do have a few helpful pointers you could take on board as you work towards becoming a budgeting pro and make rental payment concerns a thing of the past.
Accurate income calculations
In order to know what you can afford you’ll have to accurately calculate all streams of fully taxed income. This should include your salary along with any other consistent or alternative income you receive, such as additional part-time work, pension payments, and anything else that you consistently expect to receive in your bank account every month. A popular guideline indicates that as a general rule of thumb, tenants should aim to spend no more than 30% of their income on rent. So, once you’ve added all of your income together all you need to do is work out how much 30% of that figure equates to.
Rent within your means
It’s often tempting to consider pushing the boat out when renting and while it’s extremely important to ensure we’re happy with where we live it’s also vital to do all that we can to make sure we won’t struggle with payments, both now and in the future. Note down the things you’d most like in a rental home and view a wide range of different properties to see if your priorities still remain the same. You may have to make a compromise to stick within your budget - for example, choosing between a smaller place in the perfect location against a larger place a few miles away.
A budget in tune with your lifestyle
You’ve got your total income calculated and a figure in mind for your rental budget, but what about everything else in life you have to pay for? This is where sharpening your budget knowledge becomes a key life skill so that you avoid having to play catch up with finances for parts of your life. Of course, going on a shopping spree is far more fun, but managing your finances sensibly and effectively is the best way to get everything you need and a lot of the things you want. There can be problems if that turns out the other way around! If you fail to manage your finances correctly it could eventually result in missed rent payments, which could lead to you losing the roof over your head. You have to gain a full understanding of your monthly outgoings by totalling the cost you expect to spend on the likes of food, travel, utility bills, gym memberships, monthly subscriptions etc. and making sure this comfortably fits into the money you have left over after paying your rent.
Additional rent-related costs
You should also take into consideration any extra fees or costs you may have to pay in relation to your rental property and keep funds aside to cover them. There may be incoming and outgoing fees when you move in and out of the property, furniture you want to purchase, items you want to cover with contents insurance or contributions towards any joint costs if you’re going to live with other housemates.
If you’re on the hunt for the ideal rental property in Cardiff, don’t hesitate to reach out to our expert lettings team here at CPS Homes. You can contact us by calling 02920 668585, e-mail enquiries@cpshomes.co.uk or pop into one of our three branches.
