This article gives you a complete overview of the most important factors determining the market rent you should charge for your property and may be a useful guide for you when deciding what the rent will be.
What is market Rent?
Market rent is the amount a landlord might reasonably expect to receive, and a tenant might reasonably expect to pay, for a tenancy.
Before planning to rent out your property, remember to obtain the necessary consent from freeholders/ head leaseholders, insurers and mortgage lenders if required.
How is market rent determined?
To find the fair market appraisals of your property we consider the following factors together:
- The property style and localization
- The market
- Your requirements as a Landlord
The Property and its localization
To find a fair rent you should charge of your buy-to-let investment, several factors need to be considered, like its style, construction and local market demand.
The quality and condition of its construction may have a significant impact on the rental value, where properties in good external and internal condition will let more readily a higher rent.
Another important factor is the size of the property and the number of rooms. Not only does the number of bedrooms affect the rental value but also the number of bathrooms compared to the number of bedrooms. Also, if the property has an adequate size of the kitchen and reception for the needs of the tenants.
Despite it may vary some with the area, you might achieve slightly higher rent, 5%- 10% by offering furnished property than unfurnished. However, in some area, it may be less demand for furnished properties, while other areas are facing a shortage.
If you consider renting out fully furnished, remember that the furniture must comply with The Furniture and Furnishing (Fire) (Safety) (Amendments) Regulations 1993.
Accessibility of the property to local amenities like shops, public transport, schools and parking facilities, can be an important factor affecting the rental value. However, to understand how this factor may affect the rental value, type of property and the type of tenant need to be taken into consideration.
While younger tenants may prefer to rent a flat or studio close to trendy bars, restaurants, shops etc, families may in comparison prefer to rent houses or semi-detached houses located close to schools and grocery shops.
Since most people relying on commuting to work, easy access to rail stations or motorway are often considered as a major advantage and often make it easier to rent out, especially into large cities.
When you consider the current market forces you should both take into consideration the national circumstances, such as Brexit but also the local market in your area by asking the following questions;
- How is the demand for this type of property?
- How many similar properties are on the market right now?
- How does this property compared with similar properties currently being offered and let?
- What type of market will this property appeal to?
- How long time did similar properties takes to let?
Taken these factors into consideration, you should then start to compare comparable properties with a similar style, in the same area recently let, or are under offer with your own property.
The length of the tenancy you wish to let your property and the time of the year that the property is available may also affect the market appraisals. For instance, if you only wish to let out your property during the winter when you are abroad, this will affect the opportunity to let due to the restriction on the length.
In contrast, if your property is available to let consistently the next years, this will have a positive impact due to more flexibility for tenants and will have a broader appeal.
The rental values will rise and fall as market conditions change. Rents usually rise during the peak period ie. the beginning of May to the end of September while property can be harder to let during winter.
Either you have invested in a buy- to- let property, or you will like to rent out rooms in your own home, you should always have a good background check of your prospective tenants.
However, even though it may not affect the rental value, you may be more anxious renting out your own home and imposing more restrictions on tenants that may affect the rental figure
Development of the Rental Market
Over the past few years, we have seen the costs associated with letting for private landlords have increased.
The main reasons have been new regulations, extra taxation and a slight drop in rental prices. As a result, the buy- to let has been less profitable, especially when it comes to smaller apartments. This has led to a shortage of rental properties on the market.
This trend would normally contribute to an increase in rental prices, but since salaries in the UK have not increased in parallel with inflation the increase in rental prices has been absent. Therefore, we believe that rental prices will slightly increase in 2019.
Get a Free rental valuation of your property
Abito Homes is a hybrid regulated Estate Ageny. We can offer you a free market valuation to find the current rent you should charge for your property.
We can also offer you affordable full property management service. In comparison to high street agents, we charge in average 33 % less for similar service. You may wonder how we manage to do that. This is simple, we do not have any luxury offices in the high street and keep our costs down.
We always conduct a full independent background check of prospective tenants. However, you, the Landlord will always have the last word when it comes to choosing the tenants.
We offer our tenants renting fully managed properties a unique loyalty program. This loyalty program offers tenants rewards for taking good care of your property, paying the rent on time and incentives for long term tenancies.
Financial incentives are increasingly used and have proven during the years to have a significant effect by reinforcing the desired behaviour.
We strongly believe that by offering tenants renting fully managed properties through A