How much is too much rent
It is possible to get caught in the moment regardless of whether we are trying to buy or rent while shopping for a new home.
You find your dream home and are more than prepared to move the budgetary target posts to make it yours.
If you purchase a home, pre-authorisation for a home loan helps keep things under control. If you over-commit to buying a home, you will potentially refuse an application for your mortgage.
How much is too much to pay for the rent?
Over 30 per cent of your rental revenue is usually considered too much and can contribute to rental stress.
For the average earner it is considered a sign of rental stress to spend more than 30 percent of your income on leasing. Image: iStock
"The 50/30/20 budgeting rule is a good structure to use. This means that 50% of the revenue is spent on things like rent , food and charges, 30% on non-essential products such as streaming subscriptions, dining out and other luxuries, and 20% on investments.
"You will have to look at your personal circumstances and the current position of the market when deciding how much you are willing to pay for rental."
Although it is a good idea to try to remain within the figure of 30%, the value of a property will also be calculated by factors such as location, form and scale.
Check for similar properties
Check for similar properties in the area to get a feel for what you might pay before you go to open homes.
You don't want to fall in love with a suburb and you're out of your budget to see it.
A rental demand was often motivated by the fact that one agent could not afford to buy in an area.
"It can lead to higher prices in an area, sadly, as the supply of rentals available in this area decreases," he said.
"In turn, when property owners may charge good rent in a given location, due to the high rent yield / demand to live in the region, the value of the property increases."
He says an easy way of determining how much rent is too much is to take into account the cost of servicing a loan in the same area.
Simply put, if it is easier to pay rent on the same property than paying the mortgage, you know that you pay too much.
Naturally, preferences are often included in deciding the sum you are prepared to pay to rent a house.
Some people may pay more to rent to save their travel time or, for example, to obtain a place with an additional space, and only minimise it in other areas to operate.
Yet paying more than 30% of your income on rent is seen as a sign of rental stress by the average income earner.
Reduce expenditure in other areas
Leasing people would eventually reduce expenditure in other areas
In extreme cases this can mean that people have to choose between rent payments and other needs such as utilities and foodstuffs.
If housing stress, which has been prevalent in Australia, not only affects the quality of life of the people themselves, but it also affects the rest of the economy as people are obviously not spending any less on discretionary products in the housing stress.
If you spend more than 30 percent of your income on rent for higher income, it will not always contribute to rental stress; that does not mean, however, it is a good idea.
By paying too much for your rent, you throw away money which could take you to the house.
The agent says that you can ask your landlord to make a reduction if the horse has already bolts, and that you believe you are currently paying too much rent-but be rational about what you're asking.
Using a benchmark for other properties.
You will find your property more supportive if you are shown that your rental is higher than that of a similar property in your area.
But reality must operate in both directions, according to the agent, who says that renters now have record vacation volumes on the rental market and some landowners struggle to replenish their real estate due to the COVID-19 crisis.
"Look to get at least a 12-month rates guarantee and even some written assurance from the landlord that the rental will only rise by some proportion every year afterwards.
"Right now the business is a leasing company – use this additional lever to gain some value."
Note this article is not a financial or legal advice. Please check with your financial and legal qualified advisors before taking any decisions on your own.
For further information about real estate in this area, contact No Bull Real Estate, your most reliable and friendly real estate agents in Newcastle & Lake Macquarie. Buying, selling, leasing for residential, commercial, industrial property, contact your local expert to buy, sell or lease today on 49552624 or https://www.nobullrealestate.com.au