How to price a property to let
With rental demand for properties continuing to outstrip supply across many parts of the country, landlords’ expectations remain high as far asking prices are concerned. But how do we know how much our properties are really worth to rent?
What points should I consider when pricing my rental property?
“There are various points to consider when pricing your property to let,” says proprietor of Belvoir Bury St Edmunds Patsy Day. “Firstly, think about the property itself. How many bedrooms does it have? And what size are they? For example, two double bedrooms will usually command more rent than one single and one double.
“The time of year can also affect the price you will achieve,” she continues. “Demand usually outstrips supply during June, July and August so higher than market rents can more easily be achieved at this time.
“Also local market dynamics will have an impact and a good knowledge of the local market is invaluable. For example, tenants working in certain local industries, such as schools and universities, will need accommodation at particular times of the year.
“Timescales are also an important consideration. If you are in the process of doing work on the property, or you don’t need a quick let, you may have time to try a slightly higher asking price to test the market.”
Many landlords also think about their own financial commitments, such as mortgage payments, maintenance and emergency funds, when determining their asking price. However, proprietor of Belvoir Cheadle Darragh Lee warns that, while cash flow is a consideration, it’s essential to make sure the maths add up before investing in a property…
“If you need to be achieving a certain price to make it a worthwhile investment or to cover mortgage payments then it is essential to do your market research before purchasing,” he says. “Once you’ve bought that investment property, it will be too late to try and make the numbers stack up. No matter how much rent you want or need, market forces will always tell you what it’s worth!”
Why are current market values important and how can I find out what they are?
“Very useful information can be gleaned from various sources regarding current and previous rental prices,” says Patsy Day. “It is important to take this information into account so that you achieve or buck the market norm. For example, if two bed flats typically let for £550 in your area then yours will have to have something special to achieve £650.
“Rental prices for properties currently to let in your area can easily be found in the property sections of local newspapers, on property portals, such as Zoopla, Rightmove and PrimeLocation, or by asking your local letting agent.”
How will I know if I’ve pitched my property at the wrong price?
“If you’ve pitched your property at the wrong price you will know about it very quickly,” says Darragh Lee. “If you’ve gone in too low, you will have prospective tenants queuing up to view the property within hours of it going live on the internet – and, in extreme cases, you might even end up causing a bidding war.
“Conversely, if you’ve pitched it too high, the phone won’t ring and the market will show its lack of appreciation of the incorrect pricing by not booking viewings until you’ve adjusted it accordingly. This can waste valuable time and money while you realise what is happening.”
If a perfectly presented and proactively marketed property isn’t attracting tenant interest then it’s probably incorrectly priced, agrees Day. “If you are proactive and your marketing is extensive and enticing (i.e. it sells the benefits of living there, plus includes lots of internal and external photos and floor plans) and the phone does not ring with enquiries, then your price is too high – simple,” she says.
What are the benefits of asking the advice of a letting agent?
“It’s important to get advice from a local agent to ensure that you get the correct rental price, as well as ensuring you source your tenant as quickly as possible,” says proprietor of Belvoir Liverpool West Derby Adam Rastall.
“Although property portals, such as Zoopla, Rightmove and PrimeLocation, can give you an indication of what price similar properties are currently available for, it’s vital to remember that this is the ‘asking price’ not the actual price the property let for. An overpriced property may give you a false valuation.
“Your local letting agent is the best person to value your property because they have local experience and will know what has previously let [and at what price] in your road or area. To give you the most accurate valuation possible they will also take many things into consideration, such as tenant demand, quality of decoration, quality of furnishings and the time of the year.”
Day adds, “A professional letting agent understands the local market and the current and previous pricing of properties in their area. If they cannot give you a rental valuation straight away they should be able to give you a reliable figure within 24 hours.”
How can a letting agent help me maximise the rent for my property?
“Good independent unbiased advice from a specialist letting agent will go a long way to ensuring your investment delivers the max,” says Day. “They will be able to advise on what work needs doing prior to marketing – a lick of paint or investing in a new bathroom may take the rent up significantly.
“They will also be able to advise you on how to present the property for the rental market. For example, lampshades are small and inexpensive but they make a room look much warmer than a bulb on a cord, particular in an empty property.
“A good agent understands the dynamics of the local market too and will be able to advertise your property extensively for you.
“It’s extremely useful to take advice from an expert – after all they know what types of properties tenants are looking for… and how much they’ll be willing to pay to live there.”
Price pointers – at-a-glance
√ Size of property
√ Size of bedrooms
√ Local market dynamics
√ Current competition
√ Location of the property
√ Local amenities
√ Transport links
√ Time of year
√ Presentation of the property
√ Essential timeframes
√ Outside space
√ Parking facilities
√ Age of the property
√ Property type
√ Tenant demand
√ Furnishings and appliances
√ Included extras, such as utility bills or Council Tax
Article courtesy of Choices Today