how to calculate rental affordability? can i rent a £1400 property with £465000 net income?

[feathers21]

I got so confused about this.

Recently applied for a property to rent at £1400 per month. got call back today from agent saying referencing company needs a £48000 NET income to support this rent.

we are self employed so the income is what we take out, which is net income. Last year this figure was £46500. ( equivalent to an employee's annual salary of £68000 before tax)

I had a look online, the standard of renting affordability is either 2.5 X your annual salary(NET) or you make at least 30 x of monthly rent.
so
1400 per month X 12 X 2.5 = 42000 (net income)
1400 per month x 30 = 42000 (net income)
In this case our last year's figurer is enough.

I also used the affordability calculator on the referencing company's website (rentguard) , it turns out our income can rent a property at £1490.

I am now fear we not going to pass the credit check, and we will not only lose £200 application fee also have to start all over again.

Just in case anyone wants to ask, we are paying cheaper rent now but only been 3 month. Before August we were paying £1550 for 2 years and £2050 for 3 years ( that was London price though)

I don't know why they requiring that amount, Has anyone had similar experience or used RENTGUARD for credit check referencing ?

the extra zero in your thread title made me wonder why you were worrying!

but also - the rent is £1400 and the calculator says you can rent at £1490. So where's the problem?

BUT as you are self-employed and therefore don't have a guaranteed income, could you offer paying six months in advance? That gets past the credit check. (it's what I've had tenants do).

make sure (as I did) that the money is ring-fenced by the agent as it will drip-fed to the landlord a month at a time.

oops silly me !!!!I wish we really make that much! then I would not be here making all this fuss!

Thank you special for your reply.
Yes we offered 3 month in advance. that's all the money we have, if we are to offer more we will need to borrow from family which we don't want.

the issue with that is that the minimum rental term is 6 months. Explanation (not suggesting any of this applies!)

Here is the worst case for the landlord; you move in and can't afford it, so stop paying, that means possibly 3 months with no rent before he/she can even begin eviction proceedings, which can take another 4 months. Property rental is the only business where the provider is compelled to keep providing even when not paid, which is why all these checks.

now, if you don't pass the affordability check the landlord's rent guarantee insurance won't pay out. He/she may not want this risk.

however it does look like you do pass the check - I assume you've also looked at council tax and estimated bills? So flag this up. A guarantor is another way round it if they are still uncertain.

well, we have always paid more in rent, same accountant for the past 4 years.

Everyone has their own instabilities, people with jobs are not more reliable in my opinion.

we can't even get a guarantor as DH's brothers recently lost his job.

DH and I just decided if we get rejected we will look elsewhere and we are not going to offer 3 month rent upfront anymore, seems it doesn't help anyway.
I guess we just need to be prepared for the worst.

you're quite right - no-one has a stable job.