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rental Rule of thumb

 
 
SG
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      03-23-2005, 05:34 PM
I am thinking of renting in the private sector and was wondering what
the rule or thumb might be as regards the amount to pay for rent
monthly. I've heard some estimates that it should be a quarter of you
income (i.e. one week) and others a third of your monthly income.
Would this be just the rental factor or should you take into account
community charge and bills?

Thanks
Sam
 
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Lobster
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      03-23-2005, 06:41 PM
SG wrote:
> I am thinking of renting in the private sector and was wondering what
> the rule or thumb might be as regards the amount to pay for rent
> monthly. I've heard some estimates that it should be a quarter of you
> income (i.e. one week) and others a third of your monthly income.
> Would this be just the rental factor or should you take into account
> community charge and bills?


Eh? "Should be"? Rent is dead money, it's not like it's a savings plan
or a mortgage. Pay whatever you want to or can afford to pay.

David
 
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Mark Blewett
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      03-23-2005, 08:45 PM
On Wed, 23 Mar 2005 18:41:17 GMT, Lobster
<(E-Mail Removed)> wrote:

>SG wrote:
>> I am thinking of renting in the private sector and was wondering what
>> the rule or thumb might be as regards the amount to pay for rent
>> monthly. I've heard some estimates that it should be a quarter of you
>> income (i.e. one week) and others a third of your monthly income.
>> Would this be just the rental factor or should you take into account
>> community charge and bills?


For the OP;

Its depends on the rental market where you are... but personally I'd
aim to split income after tax as follows;

- 1/3 rent
- 1/3 living (including bills)
- 1/3 saving

Depending on your live style you may want to adjust this.. but
everyone should be aiming at saving 1/3 of income.. whether it be a
deposit for a house, to redo the kitchen or want kids.

>Eh? "Should be"? Rent is dead money, it's not like it's a savings plan


I agree.. and hence my sugestion above.

>or a mortgage.


What about the interest paid on a mortgage? Surely thats "dead money"
too?

Given the doubling of house prices over the past few years, to me it
currently makes more sense to rent.

For example, is it better to pay rent to cover a 100k landlords
interest only mortgage when they bought 5 years ago, or buy and pay
interest to the bank for 200k?

>Pay whatever you want to or can afford to pay.


The first thing is look for somewhere you could stay and rent for
awhile.. ask about the landlord (how mant properties, when did they
buy etc)... and make sure you budget allows you to save.

Regards
Mark



 
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Mr Power
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      03-24-2005, 12:10 AM
> Eh? "Should be"? Rent is dead money, it's not like it's a savings plan
> or a mortgage. Pay whatever you want to or can afford to pay.


Rent paid is no more "dead" than interest paid
(which is the cost of "renting money").


 
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stephen
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      03-24-2005, 07:51 AM
Seems to me that there is too much accommodation to rent these days. From
what I see in South Wales the average rents seem to be dropping about
5%-10%, maybe thats happening elsewhere as well. It might be worth haggling
a bit on the asking price.


"SG" <(E-Mail Removed)> wrote in message
news:(E-Mail Removed) om...
>I am thinking of renting in the private sector and was wondering what
> the rule or thumb might be as regards the amount to pay for rent
> monthly. I've heard some estimates that it should be a quarter of you
> income (i.e. one week) and others a third of your monthly income.
> Would this be just the rental factor or should you take into account
> community charge and bills?
>
> Thanks
> Sam



 
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SG
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      03-24-2005, 09:32 AM
Thanks for your advice. I live and work in an expensive region where I
just fall out of the house market in the areas I want I want to live.
I believe that the house price to salary ratio might improve so I
thought I could rent and save while the gap closes.
It's a bit of a gamble but I think that house prices have reached
their critical mass in this area.
 
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Tim
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      03-24-2005, 10:00 AM
"Mark Blewett" wrote
> ... everyone should be aiming at saving 1/3 of income...


*Everyone*??

"Mark Blewett" wrote
> ... whether it be a deposit for a house, to redo the kitchen or want kids.


What about people who have already bought a house, just re-done the kitchen,
& don't want / can't have any more kids?

"Mark Blewett" wrote
> What about the interest paid on a mortgage?
> Surely thats "dead money" too?


Surely it depends whether the house is increasing in value at greater than
or equal to the interest rate paid, or not?



 
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Lobster
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      03-24-2005, 02:13 PM
Mr Power wrote:
>>Eh? "Should be"? Rent is dead money, it's not like it's a savings plan
>>or a mortgage. Pay whatever you want to or can afford to pay.

>
>
> Rent paid is no more "dead" than interest paid
> (which is the cost of "renting money").


But paying interest (and we're talking mortgages, aren't we) gets you on
the property ladder, doesn't it? Personally, having paid a mortgage for
about 18 years or so, and a hell of a lot of interest, has made my
on-paper "wealth" a hell of a lot more than it would have been had I
been renting all those years. That's why I'm saying rent money is "dead".

David
 
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Mark Blewett
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      03-25-2005, 01:52 AM
On Thu, 24 Mar 2005 10:00:43 +0000 (UTC), "Tim" <(E-Mail Removed)> wrote:

>"Mark Blewett" wrote
>> ... everyone should be aiming at saving 1/3 of income...

>
>*Everyone*??


I believe so..

>
>"Mark Blewett" wrote
>> ... whether it be a deposit for a house, to redo the kitchen or want kids.

>
>What about people who have already bought a house, just re-done the kitchen,
>& don't want / can't have any more kids?


I was using them as examples... how about a new car, saving for a
holiday.. there are always costs which are not "day to day".. this is
why I suggest saving.

>
>"Mark Blewett" wrote
>> What about the interest paid on a mortgage?
>> Surely thats "dead money" too?

>
>Surely it depends whether the house is increasing in value at greater than
>or equal to the interest rate paid, or not?


True, but with mortgages at a record times salary level, prices
falling 6 months in a row, above inflation increases in bills, reduced
high street spending and record levels of debt.... I wouldn't bet on
capital increase in house prices for a few years!
 
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Tim
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      03-25-2005, 09:52 AM
> >"Mark Blewett" wrote
> >> ... everyone should be aiming at saving 1/3 of income...

> >

> "Tim" wrote:
> >*Everyone*??

>

"Mark Blewett" wrote
> I believe so..


Really? Bill Gates **needs** to save a third of his income?
Why?? Whatever for??!

> >"Mark Blewett" wrote
> >> ... whether it be a deposit for a house, to redo the kitchen or want

kids.
> >

> "Tim" wrote:
> >What about people who have already bought a house, just
> >re-done the kitchen, & don't want / can't have any more kids?

>

"Mark Blewett" wrote
> I was using them as examples... how about a new car, ...


.... paid for already out of income, on hire purchase / loan / lease ...

"Mark Blewett" wrote
> ... saving for a holiday...


Some people don't go on holiday, for various reaons!!

"Mark Blewett" wrote
> ... there are always costs which are not
> "day to day".. this is why I suggest saving.


"Saving" is not necessarily a bad thing - but I seriously question why
"everyone" should save exactly a *third* of their income, ignoring all the
other factors which would affect this decision.



 
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