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Is it time to move out? How to work out if you can afford a place of your own

Posted 01 November 2018

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Living with your parents as an adult has its challenges. Are you financially ready to move out?

Living with your parents as an adult has its challenges. You may feel that it limits your independence, particularly if you lived away from home while studying. Perhaps you’d prefer to live with friends, a partner, or other people your own age. Or maybe you’re hoping for a place to call your own.

Whatever your circumstances, moving out is a major financial commitment - especially if you’re dealing with debts. Can your finances handle the move? Read on to find out.

Your housing options

Your opportunity to buy a home depends on your circumstances: not only your income and savings, but also where you want to live. Recent research showed that even with enough money for a 10% deposit, as many as 40% of young adults can’t afford to buy a home in their area.

Renting requires a much lower deposit, but the monthly payments are not necessarily more affordable. Spending more than a third of your income on housing costs risks putting you in financial difficulty. But across two thirds of the country - particularly London and the South - you may not have a choice. In those areas, the average cost of renting a one-bedroom property is more than 30% of the average salary for people in their 20s.

Sharing a rented property with flatmates may make renting more affordable, again depending on the area. In Manchester, two people can share a two-bedroom flat and each pay around 20% of their income on rent. In most of London, this would cost you a lot more.

Your finances

Having your own place involves regular outgoings. There are rent or mortgage payments, council tax and utility bills, and possibly a service charge. Then there’s the extra monthly expense of paying for your own food, TV licence, broadband bills and so on.

Take a look at your current income and outgoings. Would you be able to afford the regular additional expenditure of living in your own place? If your budget shows that you could -  either alone or with housemates - the next step is to look at the upfront cost of moving and work out whether you have the savings to cover it.

To buy a property you’ll need a deposit of between 5% and 20% of the property’s value. You will also need to budget several thousands of pounds for additional costs. There’s a useful list on the Money Advice Service website.

If you’re renting, the deposit is usually the equivalent of a month’s rent. (You should get this back at the end of your tenancy if you look after the property. Some local councils offer rent guarantee schemes as an alternative to a deposit, but not all landlords will accept this. ) You’ll also have to pay the first month’s rent in advance, and often agency fees. Fees charged by letting agents can vary widely. Ask about fees before you view a property, and have a look at Shelter’s website for more information.

Whatever your new housing situation, you’ll also have to pay moving costs. You may need to buy furniture, too.

Do you have the lump sum you’ll need to move? If not, you’re not alone. Recent research by the ONS found that more than half of young people in the 22-29 age group don’t have any savings at all.

If you’re tempted to start saving now, first take a look at the rest of your financial situation. If you’re in debt, it doesn’t make sense to try to save at the same time. That money would be better put towards paying off your debts so that you can spend less time and money paying them off, and have more money to live on once you do move out.

Does paying off your debts feel like an impossible task? If so it might be time to consider a debt solution. You can see what options may be suitable for you here.

by Christine Walsh

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To find out more about managing your money and getting free debt advice, visit Money Advice Service, an independent service set up to help people manage their money.