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articles > How to Decide on your Letting Price
Article > How to Decide on your Letting Price


Article kindly provided by Graham Phelps


In renting your property, the asking price is critical in attracting potential tenants. Too low and you could lose hundreds of pounds, too high and nobody comes to view. It is easy to simply re-advertise an existing rental property at the same price as the last tenant was paying. However tempting this may be, it is best to look at your price again, and with the Internet we do not need a traditional letting agent to do this for us.

Contrary to popular belief letting agents or landlords do not set letting prices, the market does. All they do is estimate a reasonable property rent based on their knowledge of the property market. At the end of the day tenants determine the price of renting a property based on what they are willing to pay. Follow these steps and you will be able to easily set your rent price as well as any professional letting or estate agent.

When setting your rental price do not be tempted to inflate the rent as this will simply drive tenants away and your property will take longer to lease, and more liable to void periods.

These are the quickest and easiest steps:

1. Search for similar properties to let in your post code on the big property websites, if you have not already done this.
2. List them out and objectively position your property against them. This is your competition and tenants will be comparing your home with these similar properties. If you feel your property is worth more, ensure you can justify why in the description.
3. Look for similar properties coming on the market and to let in your area at the main websites whilst your property is live. Over 90% of all properties on the market are on these property sites.
4. Take into account micro-location factors. For example, being next to a take away food shop might lower your achievable rental price, but overlooking a park or green area will increase it.

When setting your advert price there are few things to be aware of:

• Price ceiling - £499 sounds cheaper than £500 – the first digit of a price can have a psychological effect, which is why it so well used.
• Comparison price – you can state an artificially high figure (Was £495 p/w now £475 for quick move), with a discounted lower price – look at Amazon.co.uk for an example.
• 10% factor – special features of your property, for example a fancy front door or newly decorated bedroom might allow you to charge slightly higher but more than 10% against an identical property is difficult and may require more substantial features or benefits.
• Loaded price – price slightly higher so you have room to negotiate if you have too, but not too high that you reduce interest or enquiries.

 

 

Here is a recent press article that highlights just how rental prices can change:

Rental prices recent update (04/10/10)
Rental yields for landlords have risen to their highest level in two years as demand for properties to let continues to push up rents, new figures show.

According to specialist website FindaProperty.com, the average rental yield for buy-to-let investors during in the three months to September was 4.69% - up from 4.57% in the previous quarter and the best figure since October 2008.

Average rents were also near a two-year high after increasing by 1.4% during the quarter to £851 a month. They have risen steadily since the start of 2010 and are now 5.8% higher than in January.

Landlords are receiving £47 more a month on average than at the beginning of the year.

However, the data showed wide regional differences in the rental market across the UK. While average rents jumped in London (5.1%), the South East (3%) and the South West (2.6%) during the third quarter, landlords in five regions including Scotland and Wales were forced to make cuts.
In London average rents have risen 13% over the past one year to £208 a month.

Buy-to-let investors in Scotland had to make the biggest cut in rents during the quarter at 3.4%, while those in Wales reduced them by 2.7%.


 
   
 


 

 

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