You’ve got a house or a room you want to rent out. Perhaps you want to use the money to pay off your mortgage or you need some extra cash. Maybe you’re renting while you wait until the market’s right for selling. Or you’re going overseas for some time and want to find someone to take your room while you’re away. At the end of the day, you want to know how much you can rent your property for.
It’s important to get your rent price right. If it’s too high, you risk scaring off potential tenants, leaving you with an empty property and bills to pay. If it’s too low, you might be missing out on valuable extra money.
It’s about striking a balance. You want a good return but also plenty of prospective tenants. Deciding how much to charge tenants can be hard – especially if you’ve just moved to the area or you’re a new landlord.
Here are six important things to think about when it comes to deciding how much to rent out your house for.
Location
Location is key. Obviously, you can charge a lot more for an apartment in places such as the centre of London than in distant residential suburbs.
Check out the competition on rental websites or in the windows of letting agencies – knowing how much people are charging for similar properties can give you a sense of what’s reasonable. Rental calculators work in a similar way. Simply enter the postcode of your property and your property type and, using key data points, you’ll be given an instant idea of how much other landlords are charging in that area. However, you should take this estimate with a pinch of salt and conduct your own research as well.
Consider commuting time to the major business hubs in your city. Are there good public transport links? How long does it take to get to the centre? Also think about emerging markets. For example, when all the tech firms arrived in Shoreditch, it quickly created a boom in local employment which increased the demand for properties in the area – and as a result, the price of rent. Is this area likely to be attracting new business in the near future?
Check out the competition. Are homes in this neighbourhood going fast? Is there a high rate of demand with lots of people looking for places to live? Do properties end up hanging around in the windows of letting agencies for weeks at a time?
Also have a think about the local amenities. Are there enough shops nearby? Is there a supermarket? In what is known as the ‘Waitrose effect’, being close to certain stores can allow homeowners to charge prospective tenants more for rent.
Equally important is proximity to schools, parks and restaurants. The presence of high street chains often indicates that a neighbourhood is on the rise and you might be able to raise your rent price.
Potential tenants
Who do you want to attract? Is your property perfect for students attending the nearby university, or for professionals looking for a good commuting base? What about young families searching for a peaceful residential neighbourhood? The kind of budget your potential tenant has will affect how much you can reasonably expect to charge as rent.
Consider how you might attract those tenants who are willing to pay the most. For example, perhaps your property is close to a university or college. Undergraduates are often looking for budget-friendly properties but overseas students tend to be willing to splash more cash. Similarly, you might consider marketing it towards post-graduates or even lecturers.
Furnished or unfurnished?
New and stylish furniture and fittings can allow you to attract more tenants – and maybe even raise the price. But fitting your home out with fashionable and modern furnishings can also be expensive. You’ll need to weigh up whether it’s worth the potential increase in rental yield.
Whether or not this investment is worth it also depends on the type of tenants you’re looking for. Students are likely to be less fussed by state-of-the-art fittings than young professionals. Meanwhile, families might want to bring their own furniture.
Features
How big is your property? How many bathrooms does it have? What kind of condition is it in? Is it a new-build? How energy efficient is it? What about bonus features like a balcony, garden or parking?
Perhaps invest in upgrading your kitchen or bathroom – these rooms can be deal-breakers for home-hunters. If you’re renting a property by the room, ensuites can attract wealthier tenants who are happy to pay more for superior facilities, especially if you’re competing with student halls where bedrooms often have their own bathroom.
Condition
Making sure your property is well maintained and welcoming is vital to attracting more tenants and encouraging existing tenants to stay longer.
You might want to hire professional cleaners to do a deep clean so that your property looks sparkling new. And what about getting a fresh paint job? If you do decide to redecorate, opt for neutral colours which appeal to a wide range of people. Bright green walls, for example, could alienate whilst neutral colours often look more sophisticated – functioning as a blank canvas, they allow new tenants to make a room their own.
Don’t forget about the outside, too. Perhaps hire a gardener to do a quick spruce up. Some garden furniture could also make a difference.
Landlord policies
Finally, consider any perks you might be able to bring to your property. For example, would you permit smoking indoors? And what about pets? Many landlords don’t allow tenants to bring their furry friends with them but if you choose to do so, you might have more people interested. There’s a lot of pet-owning home-hunters out there!
For more information on how to rent a flat without an agent and how to put your house up for rent, Spotahome is here to help!