Tenant Rent-to-Income Calculator for Landlords

Tenant Rent-to-Income Calculator

A quick “yes/no” on affordability is not enough. The August Tenant Rent-to-Income Calculator helps you assess rent against income the way good referencing teams do: clear ratios, optional debt and bill allowances, and sensible thresholds for single tenants, couples and HMOs. This tool is guidance only. It is not financial advice or a credit decision. Ready to try August?

What this calculator does and why it’s different

Most tools stop at a single percentage. Ours shows rent-to-income (RTI) and income-to-rent multiple (ITR) side by side, lets you test gross vs net pay, and adds bill stress (council tax, utilities, broadband), so you judge affordability in the round.

• Choose single tenant or household (combine incomes).

• View RTI % (rent ÷ income) and ITR × (income ÷ rent).

• Switch gross income to net income (take-home) if you prefer a conservative view.

• Add estimated monthly bills and (optionally) other debt payments to stress-test.

Core measures you’ll see

• Rent-to-Income (RTI): Monthly rent ÷ Monthly income × 100.
  Lower is safer. Many landlords aim for ≤ 30–40% on gross income, or ≤ 45–50% on net income when bills are modest.

• Income-to-Rent (ITR multiple): Annual income ÷ Annual rent.
  Common pass marks cluster around 2.5×–3.0× household income, but policies vary.

• Post-fixed monthly commitments headroom: Net income − (Rent + Bills + Debt)
  Shows cash left each month after essentials. You can set a minimum headroom target (e.g., £300–£500).

Set your own policy in August (e.g., “Household ITR ≥ 2.8× and RTI ≤ 35% gross”). The calculator displays pass/close/fail against those rules.

Worked UK examples

Example 1 — Single tenant, gross income policy

• Monthly rent: £1,200

• Salary (gross): £48,000/year ⇒ £4,000/month

• RTI = 1,200 ÷ 4,000 = 30%

• ITR = 48,000 ÷ (1,200 × 12) = 3.33×
  Outcome: Pass under a 30–35% RTI and 2.5× ITR policy.

Example 2 — Couple, bills stress on net income

• Rent: £1,650; Council tax/bills estimate: £350

• Take-home incomes: £2,750 + £1,900 = £4,650/month

• RTI (net) = 1,650 ÷ 4,650 = 35.5%

• Headroom after bills = 4,650 − (1,650 + 350) = £2,650
  Outcome: Healthy headroom despite mid-30s RTI; record evidence in August.

Example 3 — HMO room

• Room rent: £725 (bills included)

• Net income: £1,600; Debt payments: £120

• RTI (net) = 725 ÷ 1,600 = 45.3%

• Headroom after debt = 1,600 − (725 + 120) = £755
  Outcome: Percentage looks high, but bills-included and solid headroom; mark as conditional pass with guarantor option.

Setting policy

• Choose one primary test (RTI or ITR) and a secondary guardrail (minimum headroom).

• Household vs individual - For joint tenancies, use combined income. For rooms on separate ASTs, assess each applicant.

• Variable pay - Average the last 3–6 months for commission/overtime/bonuses; request employer confirmation where needed.

• Students/contractors - Consider guarantor requirements or fixed-term income evidence.

• Bills included? - RTI tolerances can be higher because fixed bills risk sits with the landlord.

• Edge of policy - Use guarantors, higher deposit within legal limits, or advance rent where appropriate and lawful.

How to use the August Rent-to-Income Calculator

1. Pick Number of tenants and enter income (gross or net).

2. Add monthly rent and (optional) commitments.

3. Set your policy thresholds (e.g., RTI ≤ 35%, ITR ≥ 2.8×, Headroom ≥ £400).

4. Review pass/close/fail results and the sensitivity percentage cap (±5–10% rent or income).

Disclaimer

This calculator is provided for informational purposes only and should not be relied upon as legal, financial, or tenancy advice. Results are estimates and may not reflect the actual affordability criteria.

Related August Calculators

1. Pro-Rata Rent Payment Calculator

2. HMO Calculator

3. Rent Payment Term Calculator

4. Main Calculator page