Setting the right rental price as a first-time landlord

Renting out a property can be a great form of income. Whether you’re looking to rent out a single home or multiple properties, setting the right rental price is essential for long-term success.

Set your price too low and you could be reducing your return on investment — set it too high, and you may struggle to find tenants. So, how do you strike that perfect balance? 

Read on for our tips for pricing your property in a way that’s fair to both you and your tenants.

How to determine the rent price for your property

Are you considering property investment in Newcastle? With one of the top 10 best rental yields in the UK, it’s a brilliant choice for new landlords. But what do we mean by ‘rental yield’? To put it simply, this is the percentage figure you get when you divide the annual rent price by your property value, and multiply it by 100.

As a general rule of thumb, a rental yield of 6% or higher is considered a good return on investment. 

So, how do you work out that annual rental price?

Get a professional property valuation

Before you can set a rental price, you need to know how much your property is worth. We recommend getting a professional property valuation so you have an up-to-date figure to help you determine your rental yield.

Research local property prices

According to Zoopla, the average rental price in the UK is £1220 per month — but this figure varies widely depending on where you are. In the North East, prices tend to average around £695 per month, whereas, in London, it’s over three times more expensive.

With such a broad range of figures to tackle, it’s important to focus on the local market. Not only will this help you get a suitable ROI, but it will also prevent you from overcharging your tenants — which would breach the fair rent clause of the Rent Act 1977.

Make sure you look at properties that are similar to yours for realistic expectations. For example, if you’re renting out a student property, try and find out what HMOs (houses of multiple occupation) with the same number of bedrooms as yours are going for.

Decide how you’ll market your property by considering your property’s condition and amenities

It’s not just your property’s location that impacts its rental price. You also need to consider the condition it’s in and the amenities you are offering your tenant. 

A recently refurbished property, for instance, will bring in a higher rental yield than a similar one in need of repair. Likewise, if you’re offering a furnished home, you can charge a higher rental price than if it was unfurnished.  

Are you renting out a house with a garden? Is there a gym in your block of flats? Perhaps you can offer a driveway or private parking spot. Additional factors like these will also affect your property pricing strategy.

It’s also worth taking local amenities into account. Convenient transport links, close proximity to shops, and good job opportunities can all boost your rental price. 

Advice for landlords from Seekers

Setting the right rental price for your property can seem complex at first, but with these tips, you can soon be earning a good return on your investment. If you’re new to the world of property management, the team at Seekers is here to support you with all aspects of the process. 

We’ve been working with landlords in the North East for over 20 years and our Landlord Hub is full of advice to help you get the most from your rental property. Whether you’re interested in refurbishing your property or want advice on partnering with a letting agent, we can help. 

Feel free to get in touch for more information.