Affordability calculation

General Discussion

A long time ago, when I used to work for a building society, we used to have a formula to decide whether loan repayments would be affordable even if interest rates increased.

For renting though, there doesn't seem to be a consensus position. For example, RentRight use a rule of £30000 of income per £1000 of monthly rent, which appears a blunt instrument at best. Other examples look through 3-6 months' bank statements and consider the net income after tax, loans, insurance and other commitments and state that around 35% of the residual income could be used for housing/rent purposes.

I spoke to one LL this week who doesn't do any diligence himself but gets it done via a 3rd party company as part of the referencing process.

What method do you use ?