If you have purchased a property to rent out to tenants, you will naturally want to get the best possible rent price for your property. However, bear in mind that it is important to price your rental property appropriately and ask for a price that is in line with the local market.
Whether you’re just starting out with renting out your first property or are a landlord with some experience behind you, researching the rental property prices in your local market is important. This is something that you should do on a regular basis to make sure that you are making the most of the income potential of your rental property. Taking this step can help you make sure that you are not losing money by charging too little rent, along with helping you avoid overcharging for your rental property, which can result in more periods of vacancies and struggling to get tenants in your property as they will go for the cheaper, similar properties in the area.
What is Market Rent and How Does it Impact Rental Property Valuation?
Before determining how a rental property is valued, defining market rent is an important step. Market rent refers to the going rental rate for properties in a certain area. The rent prices are based on demand in the local market, which is why rental prices are so much higher in London compared to other UK areas, such as Manchester, for example. This is why it’s so important to perform market research as a landlord and get an expert opinion from an estate agent or surveyor when it comes to pricing your property. You can’t simply decide on a rental price and expect it to be paid.
The Main Factors Affecting Your Rental Property Value
When researching your local market for rental prices, you will often find that there is a broad range of prices since not all rentals are the same. The best way to get a good idea of how much rent you can realistically charge for your property is to find properties in the local area that are similar to yours and see how much rent is paid for them. Some of the main factors that can impact the rental price include whether or not the house is an HMO or a private property, the number of bedrooms, number of bathrooms, property location, size of the property, whether or not there is private parking, whether the property is furnished or unfurnished, which white goods are included, whether or not pets are permitted, and if the property has a garden.
Obviously, larger properties that have more bedrooms, bathrooms, overall space, and parking space tend to collect more rent, along with properties that are located in a desirable area. Permitting tenants to have their pets at the property may also increase your rental asking price since tenants are often willing to pay a little more to have their pets with them at home. It is important to adjust your rental asking price for any amenities that your property has or is lacking compared to other properties in your area. For example, if your property is fully kitted out with white goods when other similar properties in the area are not, you will usually be able to add this extra cost to the rental price. On the other hand, reduce your rental price if your property is one of other similar properties that do not have a large garden.
Tenancy Agreement Length and Rent Valuation
The length of the tenancy agreement can also have an impact on how much rent you charge. If you offer shorter tenancy agreements, you may be able to ask for a higher rental rate since tenants may be willing to pay more if they are only going to be staying in the property for a short time. On the other hand, if you are hoping to find a long-term tenant who will live in your property for years or even decades, it might be a wise idea to keep the asking rental price on the lower end of the spectrum to keep your tenants satisfied and avoid them giving notice earlier than they would like.
What Tenants Look for in Rental Properties – How These Affect the Rent Valuation
Just like when buying a property, there are lots of things that potential tenants are looking for when searching for a rental, and there are some things that tenants will often be willing to pay more for when it comes to finding a place to rent. Some of the main things to keep in mind when preparing your property for tenants and setting your rental price include:
The reality is that no tenant is going to be willing to pay top dollar for a property that is dirty or not maintained well. If your property hasn’t been decorated in some time, there are odd jobs that need doing, and a deep clean is in order, then you will probably have to reduce the rental price to accommodate for the work that tenants will usually need to do to get the property up to the standards that they want. Some tenants are willing to do jobs like deep cleaning and redecorating on your behalf in return for a reduced rental rate, which might be something worth thinking about if you just want to get the property filled quickly.
Ample storage space might help you get a better price for your rental property. These days, people have more stuff than ever before, and tenants are looking for a property that makes it easy for them to store their items at home without renting a storage unit. If you have a shed, garage, or somewhere else on the property that can be used for extra storage, tenants might be willing to pay more rent.
Where the property is located is likely to have a big impact on how much rent you can charge. Properties that are located in city centres, for example, tend to have a much higher rental rate compared to a property that is a little more out of the way due to the close proximity to supermarkets, entertainment, travel links, shopping, healthcare, schools, and other amenities. Tenants are often willing to pay more to be close to these.
Consider anything additional that is offered as part of your property that tenants might be willing to pay more for. Tenants looking for a short-term rental will often be willing to pay more for furniture included with the rent since this means that they do not have to deal with the hassle of buying and moving their own furniture if they are only going to be living in the property for a short period of time. Consider any other amenities that your property offers such as white goods like kitchen appliances, laundry facilities, dishwashers, and more that tenants might be willing to pay more for the convenience of having included.
What to Expect From a Professional Letting Valuation?
While you can look at the market and compare your property and what it offers to similar properties in the area to determine how much rent you should be charging, some landlords may benefit from having a professional rental valuation carried out. This will usually be carried out by an estate agent or other property professional such as a property maintenance company. It will typically involve somebody coming out to look at your property to check the main features such as the number of bathrooms, bedrooms, size of the property, condition of the property, and the amenities offered. One of the benefits of using a property maintenance company or estate agent to value your rental property is that they will have a lot of experience with similar properties in the area and can use this knowledge to provide you with an accurate figure, along with providing you with further information and advice on how to increase the rental value.
Ways to Improve the Rental Value
If you want to increase the rental value of your property, there are several things that you can do to attract tenants who are willing to pay more. Firstly, make sure that the property is clean, well-maintained, and has good curb appeal as first impressions matter a lot. It’s worth redecorating the property in more modern colours – magnolia might be a top choice for landlords, but a lot of tenants hate it, so consider going for off-white instead. Spending a little bit more money on paint could help you bring in more rent, after all. Consider adding more amenities to the property such as providing all kitchen white goods such as a washer, dryer, dishwasher, fridge, and freezer as these are often expensive for tenants to buy, and many tenants are willing to pay more for the convenience of having them ready when they move in. Finally, consider allowing pets. You may want to add some conditions such as the type and number of pets allowed.
If you want to rent a property out, there are a lot of different factors that will go in to determining how much rent you can get.