Knowing how much rent you should charge for your rental property is not easy. Whether you are a first-time landlord or a more experienced landlord trying a new location. It is one of the hardest parts of the rental process yet one of the vital parts of the rental process.
The amount you will charge for the rental will decide your profit, the quality of your tenants, and many more.
So now, let’s get into best practices on how to calculate the rent for your rental property! Whether you are a first-time landlord or an experienced landlord, the following factors will help you analyse your property and will help you set a rental rate.
Usually, you can use the overall value of the property to get the based rent value. The rent is typically between 0.5 percent to 1.1 percent of the value of the property. But this method is only applicable for properties valued at less than £250,000
Remember that charging too much could scare away good tenants, and you would want to focus on letting your property to good tenants.
Compare your rental property with others. This is a good starting point. When trying to decide what to charge for the rent is to check out other properties in the area where your property is and know how much they are charging.
However, you must compare your property with similar property. One of the common mistakes that some landlords do when they use this technique is they compare their property with another type of property. You must ensure that when you are going to let a one-bedroom flat property, you should also compare it with a one-bedroom flat.
Finding the number of bedrooms, the amenities included, the number of bathrooms, the age of the property, and any upgrades are some of the characteristics you need to consider when comparing your property with other properties.
Remember that if you charge too much, more than the average rental price of the local properties with the same characteristics you will scare away tenants. On the other hand, you also want to ensure that you are shorting yourself by charging too low a rental price. Analysing the local market can help you find the right balance of value for your prospective tenants and profits for your rental property business.
Consider the Demand
Demand can affect the rental price of your property. For example, due to Covid-19, the demand for student rentals went down as many foreign students did not come back to the UK. So, the demand for rentals went down.
Another example, due to the pandemic, many people stay at home, and most are working from home. Due to this nature, more people want to have more space and a garden on a property. So, the demand for properties with gardens became higher. In effect, the price for properties with gardens became higher as well.
So, the changes in demand affect how much price you’ll set for your rental property.
In general, the lesser the demand, the lower you must make your rent so that you can bring in tenants. When demand is high for the type of property you are offering, you can set the rental price higher.
Expenses should be covered
Factors that can affect how much money you will profit from a property should be considered when setting a price for the rental property. Factors such as mortgage payments, maintenance cost, vacancy period, taxes, and others should be considered.
Those expenses should be taken into consideration because you want to make sure that you are profiting from the property.
Amenities of the property add value to the rental price. For example, a fully furnished property has a higher rental price compared to an unfurnished property.
Do you need a letting agent?
Letting agents will help you find the tenants and advertise the property for you. And they can go beyond this, offering full property management services. But of course, there are fees to be considered.
We provide lettings and property management services. We are based in south London. To know more about us and how we can help you as a London landlord, call us on 0208 355 3405 or simply contact Bluestone Properties.
Marketing your letting property is a big part of being a landlord. Properly and effectively marketing your letting property is the best way to attract the right tenants and fill the vacancies fast. However, marketing properly can be expensive and time-consuming. Oftentimes, landlords choose to just forgo marketing, they would just put for rent signs in their...
Here are the 5 things that landlord should be doing by 2022. 1. Marketing your Property OnlineToday, most tenants look for a rental property online. In order to reach wider audience and to attract tenants, you should market your rental property online.When posting your rental property online, make sure to put clear descriptions of the property as...
There are many factors involved in a landlord achieving success in their industry, but the standard of tenant is crucial. With a trustworthy and dependable tenant who pays on time and who treats the property with respect, the role of the landlord becomes much more manageable. However, if your tenant doesn’t pay on time or treats the property poorl...
Owning and running a rental property is a great way to earn some extra cash. But if you’re a landlord, that extra money can put you in for some extra tax liabilities at the same time. But those expenses incurred by landlords are deductible when it comes to filing income tax returns. What are the expenses that a landlord can claim?As a landlord, yo...