Let me start this off by asking you a simple question, how much rent are you currently paying? And how does it compare to your income. I have been a property manager for several years now and some of the tenants who we have had issues with are those who rent houses above their income. If you move into a house whose rent is way above what you can manage, then you can expect to run into rental arrears from time to time. Not many Kenyans are aware of how much rent they should be paying respective of their incomes. That is why I have decided to prepare a guide that will help you know how much rent you need to be paying based on your income.
How to calculate your effective rent?
Effective rent is the total amount of money you pay for the house plus any additional services you are getting from the landlord. These days, tenants pay for their water, electricity and garbage collection. In up-market residential areas this additional fee is called ‘service charge’ and it typically comprises of other maintenance costs like lift maintenance etc., My point is simple, when you are calculating the rent you will be paying, always include these charges. Let’s take a look at an example;
Mary is house-hunting and has come across a decent house. It is a 1-bedroom apartment in Kasarani with a base rent of KES 14,000, water is charged at KES 200 per unit and garbage collection equals KES 200. She has a family so she will be using about 5 units of water a month. Her effective rent will be;
Effective rent = 14,000 + 5(200) + 200
= 15,200
Most tenants make their decision based on the KES 14,000/month and with things becoming tighter for most Kenyans, every shilling counts. I have not included electricity costs and Wi-Fi expenses which could take the figure way above the marketed KES 14,000/month.
What to consider in determining total rent
1. Total monthly bill
In determining your total monthly rent bill, you need to factor in everything that you pay while living in the house. Personally, on top of the effective rent, I like accounting for my electricity bill, Wi-Fi and any other cost incurred as a result of living in the property. It gives you a good idea of how much you spend and if this will be supported closely by your income. In the case of Mary, assuming she uses electricity worth KES 1,500/Month and Wi-Fi for KES 1,500/Month. Then her total out of pocket costs for each month will be;
= 15,200 + 1,500 + 1,500
= 18,200
When making a decision to get a house, always use the out of pocket cost and not just the advertised rent.
2. What is your monthly income?
In personal finance, we have a rule called the rule of 30%. This simply means that the total amount of money you need to spend on your rent should NOT exceed 30% of your net income. Assuming you earn a net salary of KES 80,000/Month, the maximum out of pocket rent that you should be paying should be;
= 30% x 80,000
= KES 24,000
Ideally, you will want to go for something lower than KES 24,000 so that you can have some wiggle room for other expenses. If you are employed, NEVER calculate your monthly income based on the GROSS INCOME but the NET INCOME.
3. Financial goals
While I am into property and the rental business, I believe that people should not live to just pay rent and other expenses alone. You need to have financial goals such as saving up capital for a business you want to start or even one day purchasing your own plot to build. The sad thing for many people is that they don’t factor in their financial goals when calculating rent.
As a result, a person might spend 10-years in a job but never have anything to show for because they expended on living expenses. So before you choose your next house, ask yourself, will the amount you are spending allow for you to meet your financial goals?
4. Other responsibilities
Outside living expenses, we have other responsibilities that we must consider. Things such as school fees, black-tax and servicing loans have formed a bulk of the expense side for most people I talk to. I advise people to always factor in this responsibilities before choosing the amount of money they are willing to be spending on rent.
We are all different and the responsibilities you have might mean you are spending 50% of your income, hence the amount of money you have available to spend on rent might be lower than someone else earning the same amount of money you are. So NEVER compare where you live and the rent you pay with a colleague who is earning the same amount of money you are.
5. Your preferences
Another factor that will affect the rent you pay is your own personal preferences. You may opt to live next to the main road so that you are make it for work early. Or you may prefer a house with a balcony where you can store your child’s bicycle. The amount of rent you pay will definitely vary based on your preferences. So you may either need to sacrifice some of your comfort or dig deeper into your pocket.
The rent Vs. income table
Below is a table that we have prepared to help you in deciding the amount of rent you need to pay based on your income. We also have our LOCATION RECOMMENDOR tool that will assist you in narrowing down the areas that are available for you based on where you work, your income and your age.
| Monthly Income Range (KES) | Recommended Monthly Rent (KES) | Suitable Areas to Consider |
| 20,000 – 40,000 | 6,000 – 12,000 | Githurai, Kahawa West, Zimmerman, Ruai, Joska, Mwiki |
| 40,000 – 60,000 | 12,000 – 18,000 | Roysambu, Membley, Ruiru, Utawala, Syokimau (select units), Kitengela, Kiambu |
| 60,000 – 80,000 | 18,000 – 24,000 | Thindigua, Ruiru, Kikuyu, Rongai, South B, Ruaka (select units) |
| 80,000 – 100,000 | 24,000 – 30,000 | Ruaka, South B, South C, Syokimau, Lang’ata, Kikuyu |
| 100,000 – 120,000 | 30,000 – 36,000 | South C, Kilimani (studios), Westlands (shared units), Lavington (select apartments), Syokimau |
| 120,000 – 140,000 | 36,000 – 42,000 | Kilimani, Kileleshwa, Lavington, Westlands, Parklands, Ngong road, Naivasha road |
| 140,000 – 160,000 | 42,000 – 48,000 | Kileleshwa, Kilimani, Westlands, Parklands, Riverside, Ngong Road, Naivasha road |
| 160,000 – 180,000 | 48,000 – 54,000 | Westlands, Riverside, Lavington, Kileleshwa, General Mathenge |
| 180,000 – 200,000 | 54,000 – 60,000 | Lavington, Riverside, Westlands, Kilimani, Lower Kabete |
