Affordability criteria

Hi all,

Historically i have always looked for tenants rent being no more than 30% of gross income. Interested to hear any views if this is too low. I’ve received 23 requests ( in 3 days) for viewing for my property and only 1 applicant has got anywhere near this.

I am worried about loosening this criteria especially as energy bills especially and inflation are rising so quickly and would really appreciate anyones views.

The rent for the property is £2450 so the 30% criteria results in total income needing to be £98000

Any help will be greatly appreciated

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I have previously let to tenants where they failed the referencing by not meeting the affordability criteria, but they were fairly close. I also asked them to provide proof of additional savings and if they could provide a guarantor. The referencing report also showed no CCJs etc. And the tenants have been fine. Also, I used a widely available affordability calculator online which is 2.5 x rent (or 40% of income), so for £2450pcm I’m getting a gross annual salary requirement of £73.5k? Which should widen your pool of potential tenants more than the £98k requirement…

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I dont feel standard income multiples are that useful. Higher earners can afford higher multiples but you also need to consider there other expenditure as a couple with 3 kids can afford a lower multiple than a single tenant.

As a guide i would want minimum NET income (affordability should be determined by net income as tax can make a big difference to the gross income required) of rent plus
£10k pa for household bills, plus
10k per annum per adult plus 5 k per annum per child.

Your rent is circa £30k per annum so a single tenant would need at least £50k of net income, which is circa £73k gross, whereas a couple with 2 kids would need 70k of net income which if earned by one tenant would need circa £112k of gross income.

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Really useful information. Thank you so much for your input so far …it’s really appreciated

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