If you’re undercharging your tenants, you’re effectively losing out on money each month. Set the right rent price for your property and you’ll earn exactly what you should.
London estate agent Portico has put together some tips on how to achieve the correct rent price:
Rent prices rose by over 10% last year
Last year, rent prices rose by a huge 11.8% when compared with the previous year. Portico expects rents to continue increasing this year, by 3-4%.
This means that you should be putting your rents up every year. If you haven’t changed your rent price in a while, it is likely that you’re undercharging your tenants.
Check current market rates
It’s always important for landlords to know the market. Take a look at current market rates where your property is and make a note of what other landlords are charging. If an agent manages your property, they will do this for you to arrive at a fair but competitive rent price.
If you’re going to do it yourself, it is wise to undertake an up-to-date property valuation. It’s also worth having a look on property portals such as Rightmove and Zoopla to compare your property and rent price with similar homes in the same area.
What to do if you’re undercharging
If, after finding out the value of your rental property, you realise that you are undercharging your tenants, you should increase the rent when possible. If you have a periodic tenancy (rolling on a weekly or monthly basis), you can only put the rent up once a year. For a fixed term tenancy, you can only increase the rent if your tenant agrees. Once the fixed term ends, you can put the rent up.
Although this can be a difficult conversation to have with your tenants, it’s important to save money wherever you can, particularly ahead of future tax changes.
Get to work!
If your tenancy is going to come to an end in the near future, it’s a good idea to start re-evaluating your rent price now. When your tenants move out, you want the shortest void period possible, so be prepared with a new and suitable rent price.
If you do suffer a long void period, remember that you should protect your empty property with Unoccupied Property Insurance. This will cover you for any damage to your property while it is vacant.