Percentage of Income Spent on Rent

A_Sober_Paddy

Hey all,

Just wondering what is the general consensus on how much rent you should pay in relation to your earnings...

I know it varies from city to city, but lets say outside dublin, in places like Cork, Limerick and Galway...Would paying 25% of your gross weekly basic wage on accommodation be way too high?

FloatingVoter

0% ... I own the place. Water charges, property tax, insurance and all. I'm thinking of selling up and buying a tent.

megaten

A third of net income is what I generally hear.

A_Sober_Paddy

megaten wrote: »

A third of net income is what I generally hear.

Oh really, would that not be more for a mortgage?

FloatingVoter

Rent and mortgage often work out the same. Except rent is seen as dead money in Ireland. Mortgage as investment. Rent buys you freedom to move about and a mortgage is a lenghty sentence. The whole Own Your Own House thing is very Irish and good for estate agents.

Dyr

FloatingVoter wrote: »

Rent and mortgage often work out the same. Except rent is seen as dead money in Ireland. Mortgage as investment. Rent buys you freedom to move about and a mortgage is a lenghty sentence. The whole Own Your Own House thing is very Irish and good for estate agents.

Rent in ireland buys you the ability to be homeless or broke in very short order

Green Mile

Sharing in Dublin for me it’s 17.39% of my net or since you asked based on gross it’s 13.71%. It’s all about the net though.

The One Doctor

FloatingVoter wrote: »

Rent and mortgage often work out the same. Except rent is seen as dead money in Ireland. Mortgage as investment. Rent buys you freedom to move about and a mortgage is a lenghty sentence. The whole Own Your Own House thing is very Irish and good for estate agents.

Yup, that attitude is hilarious. I think it's related to the old Irish attitude that assumes someone who owns their house must be doing well for themselves. But as a tenant I have more flexibilty and spare cash than the average mortgage owner.

The word 'mortgage' means 'dead hand' for a reason.

Birneybau

Roughly a quarter.

FloatingVoter

Bambi wrote: »

Rent in ireland buys you the ability to be homeless or broke in very short order

You can wind up homeless and broke no matter what your background property wise.
On mainland Europe renting is not seen as something students and entry level workers do, its just the norm. Here and in the UK we have the Property Ladder. And banks. Lots of banks.

renegademaster

i'm on the dole so it's 65%, havent got rent allowence in years cos rents are too high and the cap on ra is far too low

FloatingVoter

renegademaster wrote: »

i'm on the dole so it's 65%, havent got rent allowence in years cos rents are too high and the cap on ra is far too low

True, the further down the income level you get, the higher the percentage will be on rent / mortgage. If you fail the means test, the percentage is a not very funny joke.

Awkward Badger

The One Doctor wrote: »

Yup, that attitude is hilarious. I think it's related to the old Irish attitude that assumes someone who owns their house must be doing well for themselves. But as a tenant I have more flexibilty and spare cash than the average mortgage owner.

The word 'mortgage' means 'dead hand' for a reason.

I don't think it comes from that attitude at all. I think it comes from the sense of long term security owning your own home brings. And the sense that it is your home. That's how I see it anyway, while renting might not be any more expensive or even cheaper and mortgages come with their own problems. It would be a grand feeling to know you own the roof over your head.

FloatingVoter

Awkward Badger wrote: »

I don't think it comes from that attitude at all. I think it comes from the sense of long term security owning your own home brings. And the sense that it is your home. That's how I see it anyway, while renting might not be any more expensive or even cheaper and mortgages come with their own problems. It would be a grand feeling to know you own the roof over your head.

I know. After a lottery win, the first thing people do is buy their own house. Extremely sensible if you're high income or lucky. However some people become slaves to the house they're living in. The amount of people in negative equity now because they fell for the hype or were suckered into mortgages in the boom is unbelievable.

timetogo

We need to pay 28% of our net (myself & my missus) to pay it off.
We've been paying about 40% though to get the term down. Can't wait until it's 0% forever.

FloatingVoter

That backs up the third of your income answer. 40% at a stretch and 28% normally. And that's a double income situation going by one example alone.

Awkward Badger

FloatingVoter wrote: »

I know. After a lottery win, the first thing people do is buy their own house. Extremely sensible if you're high income or lucky. However some people become slaves to the house they're living in. The amount of people in negative equity now because they fell for the hype or were suckered into mortgages in the boom is unbelievable.

Well if its sensible thing to do when on a high income or lucky enough to be able afford it you have to remember what things were like during the boom. A lot of people were on a high income and a lot of others could easily afford the mortgages.

There probably was an element of hype but very few seen the crash coming. And I think negative equity is how people talk about bad investments, not homes. If I was happy to pay 500k for my home and I could still afford the mortgage then I wouldn't be too bothered that it would only be worth half what I agreed to pay for it.

There's no denying though that lots of people bought houses as investments and are now stuck sitting on those bad investments. But I don't think the overall view in Ireland of thinking its better to own a house than rent it is based more acting the big man than simply wanting the security of owning your own home.

Egginacup

A_Sober_Paddy wrote: »

Hey all,

Just wondering what is the general consensus on how much rent you should pay in relation to your earnings...

I know it varies from city to city, but lets say outside dublin, in places like Cork, Limerick and Galway...Would paying 25% of your gross weekly basic wage on accommodation be way too high?

Why are you mentioning gross wage. The only thing that matters is what you take home and the percentage of that that you pay out on rent, food, bills, etc.

I had a summer job in a country club in the US earning $4.50 per hour and $6.75 overtime. It was a waiter job and I didn't have to pay taxes. Food and accommodation was included so it was a pretty good deal. Generally I and the other Irish students worked Wednesday to Sunday, clocked up about 55 - 60 hours and took away about $300 each week with no outgoings.
I had heard that waiters in Manhattan could make 700-800 a week and I told my uncle this. He told me to stay the fcuk where I was as I'd have to shell out for rent if I went elsewhere and was never going to be guaranteed 800 a week anyway. His words were "It's not what you can earn, it's what you can save that's important." Sound advice.

Anyway sorry about that ramble but your net wage is the only thing that's important. If you're spending more than a third of your take home pay on rent then it's a bit too much, IMO.

Egginacup

Awkward Badger wrote: »

Well if its sensible thing to do when on a high income or lucky enough to be able afford it you have to remember what things were like during the boom. A lot of people were on a high income and a lot of others could easily afford the mortgages.

There probably was an element of hype but very few seen the crash coming. And I think negative equity is how people talk about bad investments, not homes. If I was happy to pay 500k for my home and I could still afford the mortgage then I wouldn't be too bothered that it would only be worth half what I agreed to pay for it.

There's no denying though that lots of people bought houses as investments and are now stuck sitting on those bad investments. But I don't think the overall view in Ireland of thinking its better to own a house than rent it is based more acting the big man than simply wanting the security of owning your own home.

What was an average income during the boom anyway as opposed to what it is now? I was living overseas all during the Tiger years

FloatingVoter

Variety of reasons for getting stuck in negative equity. I am not including and didn't even think initially about clowns buys investment houses off the plans in Bulgaria. Good luck to them. I knew one or two of the idiots. I think one still has a condemned and half-finished apartment in Spain. No roof.
The people I feel sorry for are the ones that did want that roof over their heads and didn't see the cliff approaching. They were helped to the edge by some very greedy and immoral people.

bumper234

Bambi wrote: »

Rent in ireland buys you the ability to be homeless or broke in very short order

How many home owners have gone bankrupt in the last few years do you reckon?

FloatingVoter

Egginacup wrote: »

What was an average income during the boom anyway as opposed to what it is now? I was living overseas all during the Tiger years

Removing all the extra taxes the recession gave us. Doing the same job at entry level in IT would probably have netted you €10,000 more p.a.
I did interviews drunk, got the job - and walked three weeks later for another one. It wasn't a boom, it was a party. Then the music stopped.

Potatoeman

Awkward Badger wrote: »

Well if its sensible thing to do when on a high income or lucky enough to be able afford it you have to remember what things were like during the boom. A lot of people were on a high income and a lot of others could easily afford the mortgages.

There probably was an element of hype but very few seen the crash coming. And I think negative equity is how people talk about bad investments, not homes. If I was happy to pay 500k for my home and I could still afford the mortgage then I wouldn't be too bothered that it would only be worth half what I agreed to pay for it.

There's no denying though that lots of people bought houses as investments and are now stuck sitting on those bad investments. But I don't think the overall view in Ireland of thinking its better to own a house than rent it is based more acting the big man than simply wanting the security of owning your own home.

The problem with renting is that you are paying someones mortgage anyway. I think Ive paid 100k in the last ten years. You dont have stability as your ll can increase rent and decide to end the lease.
You have inspections, getting things fixed can be a hassle, you cant change things without permission and adding value to the property can just increase your rent.

We havnt changed things enough to make renting more attractive and even now your mortgage would be cheaper than renting in many areass. It also decreases as you pay off capital.

Dyr

bumper234 wrote: »

How many home owners have gone bankrupt in the last few years do you reckon?

How many of them are still living in their houses years later compared to renters who get turfed straight away?

Reckless Abandonment

FloatingVoter wrote: »

Rent and mortgage often work out the same. Except rent is seen as dead money in Ireland. Mortgage as investment. Rent buys you freedom to move about and a mortgage is a lenghty sentence. The whole Own Your Own House thing is very Irish and good for estate agents.

Will you be saying that last part
when you're 65 and still paying rent...

Egginacup

FloatingVoter wrote: »

Removing all the extra taxes the recession gave us. Doing the same job at entry level in IT would probably have netted you €10,000 more p.a.
I did interviews drunk, got the job - and walked three weeks later for another one. It wasn't a boom, it was a party. Then the music stopped.

Are you serious? :pac:

As I Unix / Linux guru I probably could have cleaned up here.

FloatingVoter

Reckless Abandonment wrote: »

Will you be saying that when you're 65 and still paying rent...

Look at the second post in the thread. Besides, I'll be dead by 65.

Potatoeman

FloatingVoter wrote: »

Look at the second post in the thread. Besides, I'll be dead by 65.

Mortgages go down as you pay them off rent usually goes up.

Reckless Abandonment

FloatingVoter wrote: »

Look at the second post in the thread. Besides, I'll be dead by 65.

The chances are you won't.. well hope not

A_Sober_Paddy

Sorry i made a mistake in my OP, it should read net not goss my bad:o

Mr. CooL ICE

About 20%. Don't like the house or the fact that I am housesharing, but it's ridiculously cheap for the area I live in and don't want to let it go.

Peist2007

Bambi wrote: »

Rent in ireland buys you the ability to be homeless or broke in very short order

The Residential Tenancies Act makes it difficult for a tenant to be made homeless.

Egginacup

FloatingVoter wrote: »

Look at the second post in the thread. Besides, I'll be dead by 65.

Can me and the girlfriend move in with you?
She's an Italian yoga instructor so with her cooking and yoga for you everyday you'll probably live to 100.

FloatingVoter

Egginacup wrote: »

Can me and the girlfriend move in with you?
She's an Italian yoga instructor so with her cooking and yoga for you everyday you'll probably live to 100.

She's in. You can jump in the canal.

Peist2007

Awkward Badger wrote: »

I don't think it comes from that attitude at all. I think it comes from the sense of long term security owning your own home brings. And the sense that it is your home. That's how I see it anyway, while renting might not be any more expensive or even cheaper and mortgages come with their own problems. It would be a grand feeling to know you own the roof over your head.

It's only actually your home once the last mortgage payment is made. At any point before that the Bank can sell from under your feet. If you miss your final repayment after 30 years of paying the Bank could sell out from under your feet.

anndub

Currently my newly drawn down mortgage matches what my rent was. Not sure what the chances of that being the case long term are but for now I have a nicer and much bigger house in a better location for equal cash. North Dublin City area and working out at about 22% of our total monthly income.

GAC999

I have usually paid between 1/4 and a 1/3 of net income. One house share I paid for in dublin was closer to a 1/3 and it was a tiny box room. I think any more than 1/3 and it can be very harsh on your budget.

Tin Foil Hat

The One Doctor wrote: »

Yup, that attitude is hilarious. I think it's related to the old Irish attitude that assumes someone who owns their house must be doing well for themselves. But as a tenant I have more flexibilty and spare cash than the average mortgage owner.

The word 'mortgage' means 'dead hand' for a reason.

A mortgage is tough at the start alright. But, unlike rent, it is not index linked so gets far easier as time goes on.
I've had mine for fifteen years and I'm now paying about half per month as I would have to pay to rent the same house. Ten more years and I won't have to pay anything at all. I won't yet be fifty. I wouldn't have it any other way.

jiminho

FloatingVoter wrote: »

Rent and mortgage often work out the same. Except rent is seen as dead money in Ireland. Mortgage as investment. Rent buys you freedom to move about and a mortgage is a lenghty sentence. The whole Own Your Own House thing is very Irish and good for estate agents.

Ah don't be silly. Rent is, and always will be, dead money. Renting is fine during your twenties and early thirties where you might need the flexibility to move county or country, or where you might not be able to afford a mortgage. What happens when you get into your pensions years and your still paying rent, whereas your mortgage will hopefully be paid off? Mortgage repayments get cheaper as time goes on, rent usually increases every year. The people who bought during the height of the property prices are unfortunate but they are not the majority and the lesson learned is to be careful when buying a home, not to completely abandon the idea.

dirtyden

The One Doctor wrote: »

Yup, that attitude is hilarious. I think it's related to the old Irish attitude that assumes someone who owns their house must be doing well for themselves. But as a tenant I have more flexibilty and spare cash than the average mortgage owner.

The word 'mortgage' means 'dead hand' for a reason.

Renting a house is now more expensive in many areas than the equivalent mortgage. Current mortgage term would typically be 25 years. Renting for your lifetime would ideally healthwise be at least twice if not three times that term. Where would all this extra cash you claim come from?

I was renting an apartment in Cork for 800 a month. I am now paying a mortgage on a 3 bed house (25 yr tem) of about 700 a month.

I am trying to work out how I am down in cash. If I so wished I could rent a few rooms and be paying very little.

This fallacy that renting is so much wiser I really don't get.

Chattastrophe!

22% of my gross income.

conorh91

About 35%. Renting a small 1-bedroom apartment, consisting of living room cum kitchen, bedroom, and bathroom, in a converted house in Dublin 8; on approximately the average industrial wage *before tax*.

The current situation is ridiculous.

Raychie

25% and that's in urban clare

shruikan2553

It was under 20% before I went back to being a student.

On the whole renting vs owning thing l, after dealing with renting for a few years I just want out of it. The benefits are I can move somewhere else when my lease is up, any problems with the place are gone and if anything needs fixing I just call the estate agent. The downsides are having to put up with cheap old crap and waiting ages to get anything fixed

House of Blaze

renegademaster wrote: »

i'm on the dole so it's 65%, havent got rent allowence in years cos rents are too high and the cap on ra is far too low

Same boat, 75% for me. Lease is up next month and I honestly don't know where im going to go.

Cant stay here either as they are upping the rent and im dying trying to pay what it is now anyway.

I pay about 24% of my net, depending on on how much I get paid that month. Sharing with my boyfriend. He pays less because he earns less. But we both pay about the same percentage of our net pay...

Still seems so expensive though! At least we don't live in Dublin I guess

SouthTippBass

Renting and sharing a house with two others.

13.16%

PLL

60% which is a lot but we have a child and value a nice place to come home to. The extras we could buy if we paid less rent wouldn't be worth it because we wouldn't be happy in a 2 bed apartment.

efbeef

Our Rent is 14% of our combined wage (my boyfriend and I) for a 2 bedroomed apartment in commuter village in Galway. . . . we consider ourselves very lucky to be honest!!

Davarus Walrus

About 12% of gross.

fleet_admiral

0%