Many people choose to rent properties if they haven’t got the financial security to buy a property or get a mortgage, so renting is often seen as a money saving option, but is it actually going to help you save, or could renting be costing more than you realise?
We’ve looked into the costs of renting, and broken down what you’re actually paying, which we think may be helpful to anyone considering going into renting a property, or anyone trying to weigh up the difference between what they’re paying in rent and what they’d be paying if they bought.
Some rental agreements will cover your utility bills in your monthly payments, but this is rare, and in many cases, you’ll pay your monthly rent, and then your bills on top, so how much are you spending?
Rent – the one payment everyone knows and will take into consideration. Your monthly rent payments will vary depending on your property and where you’re located. Bigger cities tend to have higher rents, and the bigger your property, the more your rent will be.
Deposit – It can be easy to forget that you won’t just walk into a rented property for free and start paying monthly, a private landlord or agency will usually ask for a tenancy deposit to secure the house, this is usually about the value of one month’s rent. With this payment, as long as the landlord or agency is happy with the condition you’ve left the property in, you should get this back when you move out.
Agency Fees – if you choose to go with a letting agency to find a property, you’ll probably have to pay for their services to cover their costs.
Council Tax – Whether you buy or rent, you’ll still be charged council tax, however, you could be entitled to pay less if you’re of a single occupancy (living alone), or if you live in a student rented flat (all the occupants must be students) then you don’t pay council tax.
Utility and Household Bills – Unless your rent payments cover this, then you need to add your bills on too. Some properties will come with water or electricity meters but you’ll be told when you move in. Sometimes your landlord will assist you in finding the best providers but more often than not you’ll have to shop around to find the best deals for your property.
You’ll also need to cover your TV license, telephone and broadband, which again, we’d recommend contacting various companies or using comparison websites to find the best deal.
Service Charges – If the property you are renting has communal outdoor or indoor spaces, you may have to pay towards the cleaning and maintenance of those, this is a cost that you wouldn’t have to factor in if you bought your own property, as you’re in control of how you maintain your outdoor spaces.
Renting gets a reputation for making it difficult to save money, but if you choose a property wisely where the outgoing payments for the property leave you with disposable income that you can save, then renting could still be more affordable than buying before you’re ready.
We’d always recommend weighing up the costs of both renting and buying in comparison with your own finances to find which option works best for you.