When you’re looking to move out of home for the first time and live independently, it’s a really exciting time. However, there’s SO much more to consider than just the monthly cost of the rent when you’re searching for affordable properties to live in. Here are a few other things you should factor into your budget when you’re moving out…
Browsing the ‘properties to rent’ pages is so exciting when you’re looking for your first home as an adult. Viewing potential flats and houses is even more fun! And choosing furniture or homewares for the rooms is the best! But let’s not get carried away, because there are plenty of financial things to consider before you get to that stage. These tips will help you to be prepared and be able to enjoy living in your new home without any worries..
1. DEPOSIT
I’m sure you’re aware that rental properties require a deposit from you before you move in. This is usually as an ‘insurance’ against any damage you cause while you’re renting the property and, as long as you leave the house in the same (or better!) condition as you found it, you’ll be able to get the deposit back when you move out in the future. So the first thing you’ll need to think about is saving a deposit alongside ensuring you have enough rent for the first month or two.
However, the amount of deposit that you’re asked for can be very different for similar properties – some landlords will want the value of one month’s rent as a deposit, others may ask for two or three months and some may require a fixed amount, so be sure to check whether you can afford the deposit before you even view a property. There’s no point clearing out your bank account to cover a massive deposition when you could shop around and find a rental where a lower deposit is required.
2. FEES
If you’re looking for a rental home through a letting agent, be aware that you’ll probably need to pay some fees to the agent before you can rent the property. The trouble is that estate agent fees can vary massively from company to company. Sometimes you’ll need to pay an administration fee just to apply for a property (which covers things like credit/bank checks) and often you’ll need to pay some fees for drawing up contracts – and that’s before you’ve even got the keys for the property! At least if you know what the company’s fees are in advance you can factor this into your budget.
3. RENT
By the way, you’ll need to pay a month’s rent in advance, along with your deposit and fees, so that’s another thing to make sure you’ve saved. Plus, you must be sure that you can afford the monthly rent each month. There’s no point stretching yourself if it might put you into financial difficulties in the future – especially if you plan to live there for a few years, as rent tends to rise each year, so you’ll need to be able to afford these increases if you want to stay there.
4. INSURANCE
Once you’re happy with a property and know that you can afford the rent and fees, make sure that the person you’re renting from has suitable landlord insurance. This will ensure that the building and roof is fully protected if it requires maintenance or repair while you’re living there, plus it can even cover the contents of the property if you’ve chosen a part-furnished rental. Although you’ll still need your own contents insurance, you can rest assured that, at the very least, all building issues will be covered by the landlord’s own insurance. Just add the cost of your contents insurance to your budget to ensure you can afford it.
5. COUNCIL TAX & MAINTENANCE
While you’re viewing a property, be sure to find out what the cost of council tax will be, as you’ll be responsible for paying this while you’re living in the house or flat. Likewise, if there are any maintenance fees for the building and grounds, find out whether this is included in the rent you’re paying or whether you will have to pay it yourself – this can make a difference to your monthly housing budget and might push a property into the ‘unaffordable’ category.
6. BILLS
Let’s also consider utility bills before you commit to a property. The letting agent will be able to tell you if there are standard service charges for water and sewerage, or whether you’ll have a meter that records how much water you’re actually using. You might even be able to find out how much the previous tenant’s gas, water and electricity bills were to give you an idea of how much to add to your budget. Often, a smaller property (or a well-insulated one!) will cost less to heat, so you might want to consider this when narrowing down your rental options.
7. FURNISHINGS
Will you need to save up some extra cash to buy furniture for your rental property? Or is the property part-furnished? If so, you’ll need to take care of the items that are included as they’ll be on the inventory of the property and will need to be there at the end of your tenancy too! Perhaps it might be best to invest in your own items – or ask around for secondhand furniture from family and friends – rather than risk breaking a landlord’s table and having to lose some of your deposit to replace it.
8. EMERGENCY FUND
One thing I would always recommend is saving an emergency fund before you move out of home and take on a rental property. If you’ve saved at least 3-6 months of living expenses – rent, bills, council tax, food etc – then you won’t need to panic if your circumstances change (such as losing your job) because you’ll have the emergency fund to support you through difficult times. This allows you to get back on your feet without falling behind on any of your financial commitments.
So there you have it – once you’ve considered these 8 things, you can draw up a budget for saving the in-advance costs and will be confident that you can afford the ongoing costs of renting, including any future increases or changes in circumstance. Let me know if you can think of anything else that first-time renters should consider in the comments below- it would be good add more considerations to this list as needed. 🙂
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