Rent Affordability Calculator

How does one’s salary affect their rent affordability?
Salary plays a crucial role in determining rent affordability, as it must typically be at least 2.5 times the annual rent for a property. Many letting agents, property managers, and landlords use this guideline as a benchmark. Some may also use a different approach, requiring that the salary be at least thirty times the monthly rent. However, both methods of assessing affordability yield similar results.

Nevertheless, tenant referencing involves more than just evaluating rent affordability; it encompasses various factors. Related to salary, the person conducting the referencing will also consider the stability of your income source. Erratic income patterns, such as earning a lot in a few months but experiencing income fluctuations for the rest of the year, can negatively impact your perceived rent affordability.

Additionally, income generated from a business under your name, without a track record of consistent income for 3-5 years, is often viewed as riskier.

As a result, tenants with the best chances of approval in terms of their salary are those with a history of stable employment and a salary that is at least thirty times the rent amount set by the landlord.

Can a guarantor help improve rent affordability?
Certainly, a guarantor can be instrumental in enhancing rent affordability, especially for individuals who lack a favorable credit history and have relatively modest incomes. This situation is common among students and DSS tenants. You can opt for a guarantor company, although it’s more typical to enlist the support of a close friend or family member.

If you choose to have a guarantor, they typically need to earn three times the property’s annual rental income per year, whereas a tenant usually needs to earn 2.5 times the annual rent payments. However, this is a general guideline followed by most letting agents and landlords.

For instance, if a tenant’s income falls short by earning only two times the annual rental income, necessitating a guarantor, the guarantor must earn three times the annual income to cover the rent and secure the tenant’s approval for the property.

In cases where a tenant cannot secure a guarantor, alternative methods to explore for reducing living expenses are discussed in our article on how to live rent-free.