Portion of Income for Rent

How much should someone allocate towards rent as a % of net income
are there any formulas?

Also does anyone know of any good reverse rent calculators

I’ve always worked on the basis that 1 weeks wage should be 1 months rent.

wages gross or nett ?
I guess the latter, but just checking…

Ideally net.

In my previous job, I was paying between 26% and 17% of gross, depending on pay rises.

After moving house, and getting another (lower paid) job, I’m paying 28% of gross. In the past, it’s been comfortably affordable and I’ve been able to save 7-20% of my gross pay, in addition to high pension contributions.

I’m not sure what net is now, since I’m waiting on my new tax details, but for me, net pay would always be anomalously low, because of high AVC payments.

I’d say 20-30% of gross pay should be reasonable, depending on your other commitments.

BTW. I forgot to say that was for a small 1-bed in Ballsbridge, first leased in the madness of 2001.

European average is 30% of net household income is spent on rent

This is a good site for comparing European rent/income averages

And that also goes back to th eold mortagage application multiplier rule of 30% net income ratio. Further property price contraction necessary to normalise a sustainable market.

I simple don’t see the same price variation in Dublin, more clustering around the mean.

Places round Parnell St etc where Chinese Spar workers live don’t cost a third of what similarly sized places in Ballsbridge cost,

Just my impression? I’m more familiar with Ballsbridge than Parnell St…

It’s not just you. Within basic housing classes (e.g. 2-bed apartments in Dublin city), there is a lot more variation in quality and location than price.

I’ve seen you quote that 30% average before, do you have a source for it? It’s a depressingly high figure in my opinion, that people will spend a third of after tax income just on rent.

I had a look at that site earlier when you posted the link in another thread, looks interesting.

For a one bed outsite of centre we are 11th in the world
a 1 bed in the city centre, 16th
3 bed outside of centre , 18th
3 bed in the centre, 26th

Among the places that are more expensive are the usual suspects, Hong Kong, Japan, Luxembourg, Switzerland, Singapore etc. In most cases we are more expensive than the UK, in all cases more expensive than Germany. For a country as FUBAR’d as we are that’s not sustainable

I look after a pile of BTLs for someone for the last while.
What strikes me is what a shit business model it is if there’s a load of leverage and no price appreciation of the asset going on.

To look at this 30% European average figure.

In Ireland your “rent” gets you maintenance, white goods and furniture (albeit Bargaintown).
So you’re not spending 30% on rent you’re spending 30% on the annual cost of all of these.

In Europe do you have to pay your 30% and then pay the maintenance and furniture pack and white goods yourself?

My feeling was Bargaintown expanded to meet the demand of the “Buy to Let” Mania in the last few years.

The whole furnished thing had and always been a pain in the arse as tenant and I could never understand why Landlords would bother going to cost. Perhaps they thought they’d be lumbered with furniture when each tenant moved out.

I have walked away from nice places becasue the landlord wouldn’t remove the soiled mattress or filty curtains and coaches. It is often a good idea to broach these things on first viewing. In many instances it should be an indicator as the the tenor of the relationship you might have with the owner if there are any serious issues down the line.

If they are decent from the get go they’ll always be decent in my experience and if you are looking for a long, hassle free time I think its one way of gaging it that has worked for me.

Sometimes its not always as straight forward but price is the last thing I decide when renting not to say it isn’t important but you know you have to live there!

So in a way furniture, quality and also willingness to accommodate you as a prospective tenant should be early flags you can rely on as indicators as to how amenable the owner is.

Include the other property costs and we are very similar to Germany (Letting fees, management charges etc.).

Some sources

epp.eurostat.ec.europa.eu/statis … statistics
Housing affordability

“In 2009, 12.1 % of the EU-27 population lived in households that spent 40% or more of their equivalised disposable income on housing (see Table 1). The proportion of the population whose housing costs exceeded 40 % of their equivalised disposable income was highest for tenants with market price rents (25.6 %) and lowest for persons in owner-occupied dwellings without a loan or mortgage (5.8 %).”

england.shelter.org.uk/__data/as … port_1.pdf

I spend 35%+ of my net income on accommodation, because I’m worth it :slight_smile:

Me too and for similar reasons :wink:

While I wait for the right house at the right price I want to live as comfortably as possible so am paying 40% of net income for somewhere that way exceeds my needs. I had a different view when I was younger - rented some really scary places in the past. :open_mouth:

Really? I know this came up in another thread, but to keep the discussion to one place, the link you provided gives a city comparison tool. As earlier take the example of Stuttgart, which has a very sold economic base as the home of both Mercedes-Benz and Porsche. Note this is the real head office, not a regional HQ as in the case of Dublin and Google, and comes with many quality engineering and manifacturing jobs.

numbeo.com/property-investme … =Stuttgart

Dublin Stuttgart Difference Rent Per Month Apartment (1 bedroom) in City Centre 946.15 € 531.00 € -43.88 % Apartment (1 bedroom) Outside of Centre 740.91 € 412.50 € -44.33 % Apartment (3 bedrooms) in City Centre 1,631.25 € 1,118.50 € -31.43 % Apartment (3 bedrooms) Outside of Centre 1,150.00 € 947.50 € -17.61 %

They are huge differences. Even if you paid 2 months rent every year for agency fees it would still cheaper to rent in Stuttgart than Dublin. In reality there are a lot of places now available with no letting fees and with a built in kitchen - so the downside costs in Germany are reducing, the comparison can be made directly between headline rental prices.

Built in kitchens are not the norm, if you are lucky you can buy the one already in there, otherwise the person who lived in there before will remove it. Think of all the things you might get here when you rent a new place: furniture and even things like an iron or plates. As you have no extra costs you can easily move on to a new rental place should you want. I love the system here!

It is expensive to move to a new place in Germany, I know someone stuck for 2 years already. Mind you that salaries are much lower as well, of course rents are lower in a country with no minimum wage.

For a whole family to rent a family home, what proportion of wage is reasonable on rent - any suggestions?

Yes it makes the Irish system look very sane doesn’t it? The estate agent thing is quite new I assume, it is still possible to get a place without an agency.

The German landlord can also demand a security deposit up to max. 3 months rent.

Rule of thumb in NYC is 30% as a max. This is often described as your monthly rent times 40 cannot be greater than your annual salary. e.g. monthly rent = 2000, expected annual salary = 80,000. Apartments are let unfurnished and unless you go somewhere that deals directly with tenants you will pay a brokers fee of 1 months rent. This leads to many nyc apartments being shared between two renters

Below link has great data on all nyc areas: (esp if thinking of moving to NYC)