Getting ready to rent your first home can feel exciting and invigorating or very scary and intimidating, particularly when money is involved. One of the questions we hear most at Call us if you rent is this: “How much will it really cost me?”
At London Stays, we know just how much importance is given to documenting every detail regarding money before entering into any commitment to a property. That’s why we produced this beginner’s guide on renting costs — to help everyone handle everything from deposits to broadband, with real examples and experts to advise.
To Start: The Big One, Monthly Rent
By far, it will be your greatest single constant expense. On average, renters in the UK pay somewhat £1,245 for renting per month, though that can change greatly depending on where you live.
For example, a one-bedroom flat in central London may cost more than £1,500 a month, but in areas like Sheffield or Liverpool, such a flat could cost around £600-£800. Before you even think about looking for a new house, check out your income and see what you can afford. A good rule of thumb is to spend no more than 30 to 45% of your monthly take-home pay on rent. So if you receive £2,000 a month, it would be between £600 and £900 you could think of spending on rent.
Also, be on the lookout because some rent listings show rent in a ‘weekly’ amount. This can really confuse people. To get the monthly rent from a weekly figure, multiply it by 52 (weeks in a year), then divide by 12. For instance, a weekly rent of £250 actually means you’re paying about £1,083 a month, not £1,000. That difference adds up!
Deposit: What You Need Upfront
When considering renting costs, you’ll generally need to pay a cash deposit before moving in, usually equal to five weeks’ rent, which is held to cover any damages or unpaid rent during your tenancy.
For example, if your rent is £1,000 a month, your deposit would equal £1,150. Your landlord must keep this deposit in an approved government scheme regarding deposit protection. So, during your tenancy, the deposit will be kept safely and will be fairly returned to you at the tenancy end, as long as there have been no damages.
You can find out more about how that works through the UK Government’s official page on the protection of deposits.
Holding Deposit: Reserve the House
Once you find your dream home, you will be asked to pay a holding deposit by a letting agent, which is perhaps a week of renting costs. This will take it off the market temporarily while the letting agent or landlord does reference checks.
In most cases, the holding deposit will either go against your first month’s rent or be returned to you after everything checks out. However, always ask for written confirmation of how this will be handled.
Advance Rent: Paying Before You Move In
Most landlords will require you to pay the first month’s advance rent before moving in; this is pretty standard, as rent is usually paid in advance, not after your stay. For someone with a very limited credit history or self-employed, the landlord can require up to several months’ worth of rent as an upfront payment. Make sure to cover everything in your rental agreement clearly for what you are paying before signing anything. And if you don’t understand, then fear not to ask the agent or landlord for a breakdown in writing.
Don’t Forget to Pay the Bills: Ongoing Monthly Costs
Apart from your rent, you have quite a few more things to budget for every month. These include:
- Council Tax: assesses what you will pay according to your local authority and property band; check your council tax because it varies per location.
- Gas and electricity bills, unless they’re included in the rent (check your contract!).
- Water charges, typically one provider, depending on where you are.
- Broadband and phone, which you can compare on Uswitch.
- And a TV licence, which is required by law if you watch or stream live TV. Currently costs £159 per year, can apply online.
Contents insurance, which is for the protection of your goods in cases of theft, fire, or damage. This is different from the building insurance of your landlord, which you can compare through websites such as Compare the Market.
You really feel overwhelmed when you just finish viewing the houses; thus, these things are quickly forgotten. Finding people who live there (even better if you can talk to a few) will help paint a good picture of what to expect in terms of bills for that particular property.
Furnished or Unfurnished: What Must You Buy?
When factoring in renting costs, it’s important to note that some properties come fully furnished, others are part-furnished with a few fixtures or appliances, while unfurnished homes require tenants to cover the full cost of furniture themselves.
That property may appear to have lower rental fees than fully furnished ones, but it wouldn’t dream of saving money on furniture. Buy second-hand; you’ll be surprised when you log on to sites like Gumtree and eBay, where most furniture bought is affordable, and may even be able to get some from friends or family. A partially furnished property might also be a great middle ground if you are undecided; you get a few of the big items, but you still have the ability to personalize the rest of your home.
Other Costs a First-Time Renter Needs to Know
The biggest portion of costs is quite clear; however, there are a few hidden costs. This includes the case of losing the keys, for which one pays for a duplicate or new keys. Breaching a rent payment with more than 14 days delay also allows a landlord to charge an interest of a maximum of 3% above the Bank of England base rate for each day of delay.
In the case where an alteration will be done to your tenancy agreement-for example, if you are changing housemate-there could probably be an admin fee, usually capped at 50 pounds. Not common expenses, but to keep at the back of your head, just in.
Can You Afford It? How to Demonstrate Your Financial Stability
Landlords normally want proof that you can afford to pay renting costs before handing over keys. This would usually mean providing:
- Recent bank statements and slips
- A landlord’s reference
- Proof of address and employment
- A credit check, commonly through Experian, Equifax, or TransUnion
Insofar as a bad score is concerned, put your doubts to rest because some landlords might still consider your application if you either had a guarantor or could pay in advance.
Conclusion: A Beginner’s Guide to Renting Costs
Renting for the first time is an overwhelming maze of payments and piles of paperwork. However, with complete knowledge of all your expenses — monthly rent, deposit, broadband, insurance, etc. — you can confidently traverse the process.
With this beginner’s guide to renting costs as your checklist, you will be able to avoid any unpleasant surprises while still getting yourself a place you can call home to suit your lifestyle and budget.
At London Stays, we are here to help you — from finding your dream home to getting to grips with what it actually costs to live there.
Are you ready to look for your next rental home? Start your search with London Stays today!
