How much rent to charge? Some Things to Consider
When your property is ready to be rented, you will be faced with the task of deciding how much rent to charge your prospective tenants and asking yourself ‘How much can I rent my house for?’ The simple answer to this is not ‘as much as possible’ since the final amount you decide to charge should be based on a range of factors. Here at Hamilton Fraser, we have created a list of things to consider when deciding on the right rent price to make the process easier, attract the right tenants, and assist you in getting the best rental income.
Firstly, it is important to conduct some research about the rental income in your property’s area by looking at similar kinds of properties currently on the market or simply using a rental calculator. This will give you a good indication of the kind of rental price that is realistic for the area. The price range will then need tweaking to make it truly representative of your property.
Location is, of course, one of the most significant factors when it comes to deciding on a rental price, as tenants are going to rank location highly in relation to other factors when picking the right property for them. Transport links are also high on the list of desirable factors, with 25% of renters requiring a train or an underground station within walking distance of their home. Many more are looking for local post offices and supermarkets too. If your property is in a desirable location and in close proximity to these desirable amenities then you will be able to charge more in rent.
Potential rental yield also depends on whether a property comes furnished or unfurnished, with furnished properties usually commanding a higher rental yield, though this is contingent on the furniture being stylish and in good condition. Poor quality, outdated or shabby furniture can actually end up discouraging potential tenants. You therefore need to consider whether it would make financial sense to furnish a property to a high standard in order to charge more rent, if it means potentially repairing or even replacing the furniture in the future.
Professionals and families alike will appreciate a good parking space (or two) that is conveniently located near their property and may be prepared to pay premium rent prices for this benefit. You will need to adjust the price depending on what kind of parking your property has (if any), since a garage is typically the most desirable, followed by a driveway, with car parks usually being worth the least in terms of rent premiums.
State of your property
Besides location, the state of your property is the other most significant factor in dictating how much rent you can charge your tenants. Prospective tenants will be more likely to part with higher amounts of rent if your property has recently undergone a refurbishment, appearing modern and finished to a high standard. This is typically the ideal that most renters will be searching for. If, however, the property has been left to age or appears dated the potential rental yield you can expect will reflect that.
Interestingly, more bedrooms do not automatically translate to higher rental yields, unless you are renting to students or commuters. Most professionals and families want a good balance of living to sleeping space, with multiple bathrooms being a bonus that can command premium market prices.
The aforementioned factors will vary in importance depending on the type of tenant you most wish to rent to. Creating a profile of your desired tenant and comparing it against what your property has to offer will help to guide you when deciding how much rent to charge.
Whatever you decide on, let Hamilton Fraser help to protect your rental income and property. We have been providing award-winning landlord insurance and comprehensive cover for landlords since 1996. Our dedicated experts excel at delivering high quality customer service and tailored insurance policies that meet your business requirements.
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