What to Budget for When Renting

When searching for a rental property, the weekly rent amount is what most people rightly focus on, but there are lots of other costs to consider.

Securing a rental involves moving costs, paying a bond and rent in advance and then there’s the ongoing bills and expenses.

Here are some tips and tricks for setting a budget for renting.

How much should you spend on rent?

The accepted wisdom is not to spend more than 30% of your monthly gross income on rent, although everyone’s circumstances are different.

However, depending on where you live, the rental market could dictate that you spend more of your income on rent as a percentage of your income, which may mean some sacrifices in other areas of your personal budget.

In addition, depending on your personal savings and investment goals, it might be more appropriate to spend less on rent. If you’re saving for a house and need to increase your savings rate, for example.

Upfront costs to tenants

Once a lease is signed there are certain costs that come as part of that responsibility. Some, like moving costs, can be minimised by not hiring professionals. Others, like the bond, you need to pay before you can collect the keys.

1. Bond and advance rent payments

A rental bond is typically four weeks’ rent, but can be more, and the amount of rent in advance that’s payable varies.

2. Moving costs

While on the surface, packing some things in a van and moving may seem inexpensive, in reality, it can be the opposite.

Removalist or truck hire can cost anywhere from $200 to $3000 depending on how much help you need. If you’re on a budget try doing it yourself or asking a friend to help.

3. Cleaning the former rental property

If you’re moving out of one house and into another there are costs associated with ending a lease which covers cleaning and any other extra expenses

Professional cleaning of previous property can be hundreds of dollars depending on the size of the property and it’s best to seek the advice of the property manager if you’re thinking of doing it yourself to keep costs down. More and more property managers will ask that it be professionally done by a company who guarantees the bond, which means they’ll keep coming back until its up to the standard of the landlord.

You’ll also need to have carpets, and potentially curtains, professionally steam cleaned

Ongoing bills and expenses

There’s also a number of ongoing expenses and bills you have to pay when renting.

It can be tricky to work out how much to budget for power and water, which can sometimes be included in your rent.

one great way to budget for internet/NBN is to find a great deal on an unlimited download plan.

Car, parking and transport expenses

Setting a monthly allowance for travel expenses, which can include paid parking if you work in a city centre, registration, insurance and servicing and fuel, is also wise.

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