Landlord Products / Services
Strange. In the past week, I’ve received two emails from landlords consisting of lengthy descriptions of their rental properties, followed by the question, “How much rent should I charge?”
I guess they got their wires crossed at some point, because they seem to think I’m a letting agent.
In any case, my thought process on this issue is very simple:
- In a competitive market where there is plenty of demand, find and set the market value.
- In a slower market, find the market value and consider setting the price slightly below it. For example, if the market value is £1,000 PCM, set it at £950 PCM.
Nothing crazy or out of this world, just a formula that works.
Regulations to Consider When Setting and Increasing Rent
A few key points to consider, which may influence the rent you set, apply to landlords in England using an Assured Tenancy (which will be the vast majority of private landlords) following the introduction of the Renters’ Rights Act:
- Bidding wars are no longer permitted – landlords and agents can only accept the advertised rent (or lower) and cannot accept offers above this amount.
- Rent increases are limited – rent increases are limited to once per year and must reflect the market rate.
- No rent increases during the first year – rent cannot be increased during the first year of the tenancy.
- Tenants can challenge increases – tenants will be able to challenge unreasonable rent increases at the First-tier Tribunal.
How to Find the Market Rental Value of Your Property
- Portals – Rightmove and Zoopla will have the largest rental stock, which is why they are always my first port of call. I check what other landlords and agents are asking for similar properties in the same area. Gumtree can also be worth a look.
- OpenRent Rent Calculator – OpenRent claims that its Rent Calculator is “the best way to instantly find the rental value of any property in the UK” and that it can “calculate a super-accurate rental price for your UK property using millions of data points.” The calculator is very quick and easy to use, and to be honest, I ran a few tests and it seemed rather quite accurate. However, that is only a small sample size, so I cannot say how accurate it is on a larger scale. Still, it is a decent tool and worth trying, especially in conjunction with the property portals.
- Local Agents – look at what local agents are charging for similar properties. You could also ask for a free valuation, even if you have no intention of using their services.
Mistakes to Avoid When Setting Rent
- Charging extra for minor additions – so many landlords do this, and it’s tragic! They add value to features that do not meaningfully increase what renters are willing to pay, and consequently end up overpricing. For example, charging more for things like upgraded light fittings, feature walls, premium door handles, or basic cosmetic improvements such as repainting is unlikely to make a material difference to the achievable rent.
- Not analysing market conditions – assessing the state of the market is a critical factor when deciding what rent to set. For example, if you have a three-bedroom house in a specific area but notice there is an abundance of similar properties available, this could indicate an oversupply. In that case, setting the highest asking price may not be the best approach, as it could result in very little interest.
- Void periods vs high rent – this ties in with assessing the market. More often than not, a longer void period is more expensive than slightly reducing the rent to secure a tenant more quickly. By “uncompetitive price”, I mean charging at the very top end of the market value, not necessarily overpricing. Renters are price-sensitive creatures, so even a small reduction in rent can result in quicker occupancy, reducing the overall void period. In many cases, this leads to a higher net income than holding out for the maximum possible rent.
- Be wary of inflated rental valuations – Letting agents have been known to promise high rental returns to win custom, but these are often promises left unfulfilled and later blamed on “unpredictable market conditions”. Why would an agent be able to miraculously achieve a significantly higher rental return than anyone else? They wouldn’t. They are governed by the same market conditions as everyone else – the going rate.
Landlord out xo
Disclaimer: I'm just a landlord blogger; I'm 100% not qualified to give legal or financial advice. I'm a doofus. Any information I share is my unqualified opinion, and should never be construed as professional legal or financial advice. You should definitely get advice from a qualified professional for any legal or financial matters. For more information, please read my full disclaimer.
The biggest mistake I see all the time from Landlords is over valuation of their properties. For example they say things like "I simply must get X for my property" when the realistic value is about £50pcm lower (a relatively small amount) then the property is empty for 2 months because of this. If we say that the rent is £1000pcm vs £950pcm after 2 months the Landlord has lost £2000 if he/she had marketed the property at the reasonable rent of £950pcm and got a tenant straight away it would have taken nearly 3.5 years to accumulate the same loss and with annual rent increases probably never.