Before you advertise your property and show tenants round, you will need to set the rent. Regardless of whether you are using a lettings agent to set the rental price on your property, you are certainly well advised to get their input on the price you can market the property at. Lettings agents will visit your home and carry out Competitive Market Analysis (also known as a CMA). This initial valuation is almost always free and should take around 30 minutes.
Many landlords will get a single valuation and use that one without looking elsewhere. Others get several valuations in order to choose one. Meanwhile, a lot of private landlords get valuations in order to find out the sort of price they can expect to gain and then let their property without using the agent. Lettings companies are well used to carrying out this type of CMAs only to find that the landlord does not use their services. This seems to be part and parcel of the game. Even if you intend not to use them from the beginning, they still have the opportunity to show you their expertise and professionalism.
This market analysis is based on six main factors:
- General levels of market demand amongst tenants.
- The popularity of the area according to the normal criteria used by tenants to decide on geographical locations.
- Current rental prices being charged on similar properties in a comparable area.
- Prices recently achieved for similar properties on the books of the lettings agent.
- The general condition of the property.
- The quality, range and condition of the facilities that the property has.
The ‘CMA’ will give you an estimated market rental. From this you can derive the actual level at which you set the rent. You can also decide upon any minor or major improvements that need to be done in order to slightly increase the rental value in line with your expectations. Beware of drastically spending lots of money if you don’t get the valuation you were hoping for. You should certainly get a couple more valuations before you rush in and give your wallet a pounding.
Be wary of any agent who merely asks for the price you are looking to achieve and then quotes you a likely rental value of the same figure. You should request that the lettings agent demonstrates to you why they think that your property can achieve the rental level they are suggesting.
What should be included in the rent?
The rent will normally be exclusive of Gas, Electric, Water Rates, Telephone Charges, Council Tax etc, but inclusive of Buildings Insurance, Contents Insurance (for your own items) and Maintenance costs, unless otherwise agreed.
You could use Experians Affordability Calculator to see how much your tenant can afford.