When assessing what rental figure you should market your property at, you need to consider what is available at the time you are marketing. It is not sensible to think “well, it rented for £800 a month a couple of years ago and rents are up 10% according to that London based newspaper, so I guess £880”…when another apartment in the block with a sunnier aspect is being marketed at £850pcm.
You should also consider the situation you find yourself in. If you’ve just received the keys to a new buy-to-let, you should price it cautiously so that it lets as soon as possible. If, on the other hand, you’ve just received your month’s notice from your current tenants, you have a little time to ‘test the market’, safe in the knowledge you have a month to ‘tweak’ things if needed.
Having said that, I still wouldn’t advise automatically extracting the maximum figure you deem possible from tenants. By offering a well-presented property at a realistic or favourable price, you will get to choose from a wider pool of people. Besides, even if you do find tenants who sign up for a bumper rental figure in excess of what the property is reasonably worth, how long do you think they’ll stay put?
Consider the fact that tenants will typically stay longer in a property they feel they are getting a good ‘deal’ from. This will help you to minimise your tenant turnover, wear & tear and void periods, all of which will help you make more money in the long-run (and with less hassle). Since the tenant fees ban, the door has been opened even wider for tenants to up and leave at little cost, which they’re likely to do if they see something similar to rent at a better price.
Another reason to be realistic from the start is that the first fortnight of marketing is when you’ll get the most interest. If it’s priced too high initially tenants may dismiss it and even when it’s reduced they’ll still disregard it having seen it a few weeks earlier, remembering they’d previously rejected it “for some reason”.
Bear in mind the actual marketing figure you use too. I’ve written previously how people search the property portals online and filter properties by price. For example, you’ll lose out on a huge number of potential tenants that would be happy to pay up to £1,000pcm if you try and push the asking price to £1,050pcm.
I’d prefer to be conservative on the rental price and receive it 100% of the time from long-term tenants who appreciate living there, rather than squeezing the most I can from someone who ends up either not being able to afford it or deciding it’s not worthwhile staying.
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