So, you’re thinking about buying or renting a home but you’re not sure of the overall costs? In this article, we will break down the expenses incurred when owning or renting a property.

Mortgage repayments and renting

Mortgage and rent payments will vary widely based on the location and size of the property. The cheapest way to rent is usually through a house share, where you rent out the room of the property rather than the house itself. Usually, those who are renting will be paying more rent per month than the equivalent of the mortgage on the property, with this money going directly to the landlord.

There are other options available to budding homeowners including the rent-to-own scheme which sees the tenant pay a small deposit on the home before they move in. The tenant then pays the property owner above-market rent with the view to buying the property when able.

The average monthly mortgage repayment in the UK is around £669. In 2017, the average cost per month for tenants was £1,590, although this dropped dramatically for tenants in the North East at £544 per month.

Council tax

The purpose of council tax is to fund local services in your area, from police stations to waste collection, street lighting and road maintenance. The amount of council tax you pay will be based on where you live and the valuation band for your home. You may be eligible for discounts if you live alone or have a low household income so be sure to let your local council know if these apply to you. Council tax prices tend to vary vastly based on the area in which you live, so you can expect your monthly outgoings to reflect your location. The average D council tax band will set you back around £140 per month.

Utility bills

Utility bills generally refer to the cost of all gas, electricity and water used during the billed month. The cost of these can vary dependent on your usage and provider, as well as the tariff that you’re on. It’s usually beneficial to review your energy supplier on a yearly basis to ensure you’re getting the best deal for you; after all, spending more won’t earn you a better quality of energy.

Fixed rate and variable tariffs

The two main types of energy tariffs are fixed rate and variable. If you’re on a variable rate, your rate will vary during your plan at the discretion of your supplier. This means that your costs will go up and down on a monthly basis. If you’re on a fixed rate tariff, you will pay the same price each month based on the units of energy you have used. Both of these plans have their pros and cons, so it’s worth looking into each when sorting your annual plan.

Water bills

Unlike energy suppliers, you are unable to switch your water provider as suppliers are determined by region. However, this doesn’t mean that there’s nothing you can do to save on water bills. These bills can either work on a fixed basis or you can choose to only pay for the water you use. Many homeowners can make significant savings simply by fitting a water meter in their homes to ensure you’re paying for your actual water consumption, rather than the regional average.

Average cost of utility bills in the UK

On average, UK households incur around £49 per month in electricity bills and £48 for gas. The average water bill totals up to around £33 per month. This means that the total cost of utility bills for homes in the UK per month is around £130.

Splitting the bills

If you’re living in a house share situation or the time has come for your dependants to pay their own way in your household, splitting the bills is a great way to bring down your monthly costs attributed to your home. This usually works best if there is a designated person in charge of collecting the bills or if you pay a set amount into a joint account. For homeowners with a spare room, it may be worth looking for a lodger to reduce your personal monthly outgoings.

Food and maintenance

When it comes to your home, you not only need to think about the costs of paying for the home itself and the bills to keep it up and running, but you also need to think about the cost of living in and maintaining the property. It’s estimated that, on average, UK residents spend around £10.40 per month on cleaning supplies alone and that’s not including the overall costs of equipment such as vacuum cleaners, irons, replacing/repairing white goods and so on.

When it comes to food and drink, it has been determined that the weekly food shop for an average household (based on 2.4 people per property) stands at £91 per week, which totals up to approximately £151 per person for the month. It may be interesting to note that the highest expenses in a person’s average food budget were for processed meats, bread and cereals and non-alcoholic drinks.

Everyday expenses

Your everyday expenses will be dependent on your lifestyle, including factors such as whether you keep pets, have children in your home and if you own a vehicle. Take dog walking, for example; if you have a full-time job and pay for a dog walker to them out during the week, this will cost you around £200 per month. For working parents, nursery costs can set you back a substantial £900 per month. You can reduce these costs slightly with childcare benefits and help from family and friends.

Savings

On top of your home repayments and living costs, many homeowners and tenants put money aside each month to act as rainy-day savings, fund holidays or pay for larger expenses such as technology and cars. It’s recommended that at least 20% of your salary should go toward your savings, however, this isn’t always possible when you have other expenses to account for in your home life.

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