Whether renting or buying, living independently for the first time can be exciting, but it can also be very expensive

Teenage girl standing outside of house

Planning and working out how much money you will need in advance can save a lot of stress and strain later.

Download our budget planner template to help you. 

Costs of renting for the first time

If you are going to rent privately, there are often upfront costs as well as monthly payments. Private landlords and letting agents usually require a deposit to cover damage to the property. Your landlord or letting agent must protect your deposit with a tenancy deposit protection scheme. If there is no damage to the property at the end of your tenancy you should get your deposit back. You are usually asked to pay at least one month’s rent in advance. Currently, agents can also charge an administration fee. This means that renting can be very expensive to begin with.

Rent deposit schemes

There is help available for people who cannot afford to save for the initial deposit. Councils, charities or housing associations sometimes run ‘rent deposit schemes’ which can offer loans to be used as deposits. Some local authorities offer loans to cover the cost of rent paid in advance. This is usually paid directly to the landlord .

Search the Crisis Help to Rent Database to find projects in your local area.

Social housing is a lower cost option when looking to rent. Most social housing is run by housing associations, but councils manage some. You can apply through your council or directly through the housing association. There is often a waiting list and you may find yourself waiting for a long time. Unlike privately rented properties, social housing is allocated according to need. Shelter’s website has a lot of useful information about social housing and private renting.

Housing Benefit is available to help people who are on low incomes. You usually cannot claim housing benefit if you are aged 16 to 17 and have been in care, or you are a full-time student. If you claim Universal Credit you might get a housing costs element instead of Housing Benefit. You can apply for Housing Benefit through the Jobcentre Plus 

If you are receiving Housing Benefit and still struggling to pay rent, your local council may provide a Discretionary Housing Payment (DHP). You need to apply for a DHP through your local council. DHPs do not need to be repaid.

Home ownership – costs of buying your first home

There are many costs involved in buying a house or flat, including a deposit, legal fees, estate agents’ fees, surveyor fees and possibly stamp duty.

Stamp duty is a tax on homes that cost a certain amount of money. Currently, you pay stamp duty on residential properties (buildings people will live in) that cost over £125,000, and non-residential properties (like shops and restaurants) that cost over £150,000. The amount you pay depends on how much the property costs. Stamp duty is currently 2% on properties that cost between £125,001 and £250,000, and 5% on those that cost £250,001 and £925,000.

However, if you are a first-time buyer you do not pay any stamp duty on properties that cost up to £300,000.

A ‘deposit’ is the amount of money you pay upfront when buying your home. Your mortgage is a loan that covers the rest of the cost of the home. The bigger your deposit, the smaller your mortgage and the more likely it is a mortgage lender will approve your application. On average, you need 5% to 20% of the cost of the home as a deposit. For example, if a house costs £150,000 you will need at least £7,500 for a deposit.

Buying a home is therefore very expensive, without the additional costs of running a home once you live there. Fortunately, there are schemes available to help first time buyers. 

Shared ownership and help to buy schemes

The government offers shared ownership and help-to-buy schemes to help young, first-time buyers get on to the housing ladder. Shared ownership schemes are part-rent, part-buy. You buy a portion of the home using a combination of a deposit and mortgage. Your deposit is usually at least 5% of your share. You can buy more of the property over time, if you start to earn more money, this is called stair casing. The housing scheme owns the rest of the property and you pay rent on their share. Each scheme has its own criteria for who is eligible.

Contact your local Help to Buy agent for more information on shared ownership schemes in your area

Help to buy ISA
The Help to Buy ISA is a government savings scheme for first time buyers. The idea is that the government will add an additional 25% of your savings if you use the money to buy your first home. You can choose a Help to Buy ISA from a range of banks and building societies. You can save up to £200 a month into the ISA and must have saved £1,600 before receiving the government’s contribution. This money must be used to buy your first home and does not need to be paid back. So, if you have saved £12,000 in a Help to Buy ISA and use the money for a deposit, the government will give you £3,000 free of charge. The maximum amount the government will contribute is £3,000. Help to Buy ISAs are available for each buyer, not household. This means that if you buy a home with someone who also has a Help to Buy ISA, you could receive £6,000 in total. 

Lifetime ISA

Lifetime ISAs (LISAs) are similar and are now available to use for a deposit or retirement. You can save £4,000 in a LISA every year and you receive an additional 25% from the government each year. You continue to receive this extra 25% until you are aged 50. Make sure you will only use the money for a house deposit or retirement though, as if you withdraw money for any other reason there is a 25% penalty. There are currently fewer banks and building societies offering LISAs than Help to Buy ISAs, but more may become available in the future. 

See our Banking section for more information about different types of bank account.

Help with the costs of furnishing your first home

If you are moving into an unfurnished home, you might find that you can gather furniture from friends and family, and may own some pieces already. There may also be a furniture scheme in your local area to help you with essentials.

Search the Furniture Reuse Network for schemes in your area.

If you have been claiming benefits for the last 6 months you can apply for an interest-free loan from the Jobcentre Plus. You can use this to pay for essentials such as a fridge, cooker, bed, sofa, or the costs of moving into a new home. You usually need to repay the loan within 12 months.

Many charity shops sell furniture more cheaply than retail price. There are also several websites offering furniture cheaply or even for free, such as eBay, Gumtree and Freecycle. However, it is really important to make sure you are safe when buying online. Pay using a secure online method such as PayPal rather than bank transfer and never collect items on your own.

Flat or house sharing can be a cheaper alternative

It usually works out cheaper to share a flat than live on your own because you can share the cost of utility bills and rent. If you are looking to flat share, make sure you stay safe by using a reputable estate agency or living with people you know and trust. Go with someone to view properties and never agree to live with people you do not feel safe with.

Download our Cost of Living Rough Guide to see how much your monthly outgoings coud be.