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What To Know If You’re Renting in 2024

Prime Minister Justin Trudeau recently introduced a renters protection fund and a bill of rights, which were included in the recent federal budget. Among other things, the PM said he wants landlords, banks and credit bureaus to take rental history into account when assessing an individual’s credit score. The bill of rights would give renters access to a history of unit pricing and create a national standard for lease agreements.

The news is welcome for renters who have seen record-high average rent growth and record-low vacancy rates combine to create a tight, costly market. Not only that, but rents have also grown faster than wages, decreasing rental affordability for many.

If you’re a renter and finding rent increases are impacting your financial situation, here are some tips and information that could help.

Make saving simple by paying yourself

Homeowners pay interest on their mortgage debt, but they’re also building ever-growing equity in their property. While renters have greater flexibility than homeowners, they don’t have the option of holding equity in the place they live, adding importance to the value of saving.

Anyone, whether they’re a renter or homeowner, can benefit from ‘paying’ themself. Whether you make manual transfers or set up an automatic deduction, paying yourself simply means taking a regular amount from your income and putting it in an investment account or high-interest savings account. Automating the process takes the thought out of saving and guarantees the most essential part of the process: consistent contributions.

Don’t overpay or overlook extra costs

How much is too much to spend on rent? A rule of thumb is it should not be more than 30 per cent of your income. Depending on who you ask, the percentage should either be applied to your total salary, or the lower value that represents your net income (i.e., your after-tax earnings). Choose the smaller amount if you prefer to play it safe.

Depending on where you rent, you may also have to pay additional regular costs such as utilities and parking. Renters aren’t responsible for the immediate cost of property maintenance, but they should still pay for renter’s insurance in case disaster strikes. If your rent bill is already high, make sure these monthly add-ons don’t stretch your funds too far.

Location is likely your biggest indicator of cost

As the old joke goes, the first three rules of real estate are location, location, and location. For a variety of reasons, some neighbourhoods simply cost more. Proximity to urban centres, public transportation hubs, and popular attractions such as restaurants and shops have a big impact on rental costs. If you rent in a tower, no matter where it is, expect to pay more to live on a higher floor or in a unit that offers a superior view.

Choosing a location outside the city centre or further away from transit connections and restaurants will generally mean you end up paying less in rent. Still, as long as your budget can handle it, you don’t always want to neglect quality of life issues just to save a few bucks. If you can afford to spend a little more on rent to avoid a lengthy commute or lack of local attractions in your neighbourhood, it might be worth it. Always take time to consider a broad list of pros and cons before choosing where to rent.

Build a budget that leaves some wiggle room

Renters often tend to think of affordability on a month-to-month basis, making sure they have enough money to cover the next round of rent and grocery payments. Your budget, however, also needs space to handle year-to-year costs, unexpected or otherwise. Beyond being able to afford your monthly rental bills, make sure your budget can handle irregular and semi-regular expenses such as auto repairs, emergencies, tax bills, seasonal and holiday gifts, and possibly also vacations and travel.

Need to cut costs? Consider a roommate

While it’s great to have a place of your own, it’s not always economically practical. If you’re comfortable sharing your space with others, you can slash accommodation costs by choosing to live with one or more roommates. Besides being a more social way to live, sharing your place also offers the opportunity to save additional money by buying food and cooking together.

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