How to set a rent that keeps everyone happy

You found the perfect property, sorted the mortgage, the redecoration and all that paperwork – and now you're ready to find your first tenant. But first, you need to decide what rent you're going to charge them.
 
You'll soon know if you've set the rent too low or too high. Too low, and your phone won't stop ringing; too high, and the only people who'll be calling are telemarketers.

How do you set it just right?

Start by finding out the average price for your area. Upad's rental index helps you find the average rent for your area by the number of bedrooms in the property. This gives you a good ballpark figure to start working with.

Take a look at similar properties currently available for rent in the same area. Our price search will let you select a range, rather than a specific price, so it's best to look both above and below your target rent. Whether you're looking online or at traditional agents, get to know your local rental marketplace. Which properties get snapped up immediately? Which sit there, month in, month out, empty? Can you find a "sweet spot", where the rent is as high as it can be without putting tenants off?

It's not just about determining the average in your area and charging that: don't sell yourself short. If your property offers off-street parking, a garden or even broadband, those facilities will all increase the desirability of your property and mean that you can charge a higher rent. Decent decor, flooring and furnishings, of course, also improve rental value.

You can't always get what you want...

Consider the effect of lowering your rent on void periods. If it keeps your property fully-occupied, you could actually be better off in the longer term charging a lower amount, than holding out for the full amount but having a couple of months where you earn nothing at all.

Tenants charged a lower rent are likely to stay longer, again, minimising void periods and keeping your income stream going. Higher rents will earn you more while a tenant is in the property, but you may find they move out more quickly and that filling their place is more difficult.

The strategy you use here will depend on demand in your area, so again, it's worth keeping an eye on the local market to see how quickly property is let and just how much supply is available. In areas where there is a plentiful supply of rental property, setting rents lower to keep your rentals competitive is probably the best advice.

For more tips and advice for landlords, check out our blog and follow @AvoidTheVoids on Twitter.