Setting Rent at the Right Level
How to research the market, set a competitive rent and avoid the pitfalls of over- or under-pricing.
Setting the right rent is one of the most important decisions you make as a landlord. Too high and you face voids; too low and you leave money on the table. Under the Renters' Rights Act, the rent you set at the start of the tenancy is the baseline for all future increases.
Researching the market
Use Rightmove, Zoopla and local letting agents to research comparable properties in your area. Look at properties of similar size, condition and location. Check how long they have been on the market — properties that have been listed for more than 4 weeks may be overpriced.
The Valuation Office Agency (VOA) publishes local rent data. The First-tier Tribunal uses VOA data when assessing rent increase challenges. Knowing the VOA data for your area helps you set a defensible rent.
Factors that affect rent
- Location (proximity to transport, schools, amenities)
- Property size and number of bedrooms
- Condition and quality of fixtures and fittings
- Outdoor space (garden, parking)
- Energy efficiency (EPC rating)
- Furnished vs unfurnished
- Local demand and vacancy rates
Avoiding voids
A void period (empty property) costs you rent income and you still pay mortgage, insurance and council tax. A rent that is 5% below market rate but achieves a quick let is often better than a rent that is 5% above market rate and sits empty for a month.
Example
Market rent is £1,200/month. Landlord A sets rent at £1,300 and waits 6 weeks for a tenant. Landlord B sets rent at £1,150 and lets within 1 week. After 12 months, Landlord A has received £14,300 (10 months × £1,300). Landlord B has received £13,800 (12 months × £1,150). The difference is only £500 — and Landlord B has a happier tenant.