Guide
How much of your income should rent cost — and what the 30% rule actually means
The 30% rule is a starting point, not a law. Here's what it means, where it comes from, and why location and bills change the calculation.
Where the 30% rule comes from
The guideline that rent should not exceed 30% of income originated in US housing policy in the 1960s. It was designed as a rule of thumb for gross income — before tax. Applied to take-home pay, the effective ceiling is somewhat higher. It is a starting point for thinking about housing cost, not a universal rule. In London, where rents consume a much higher share of average incomes, 35–40% of take-home is common even for people managing well financially.
What the ratio is actually measuring
The rent ratio tells you what share of your income is pre-committed before you can make any other financial decision. The higher it is, the less room you have for savings, emergencies, unexpected bills, or changes in circumstances. A ratio above 50% is financially very constrained — one missed paycheck or large unexpected cost creates immediate pressure.
Bills change the picture significantly
If your rent includes bills, the figure is your total housing cost. If bills are on top, your real housing outgoing is meaningfully higher. A rent figure that looks affordable on its own can become stretched once utilities, council tax, and broadband are added. The full housing cost — rent plus bills — is the more honest number to use when assessing affordability.