Published 11 December 2018
If you own a property you’re planning to let out, working out how much rent you should charge your tenants isn’t always easy. It can be especially tricky, for example, if you’re just starting out as a landlord, or if you’re renting out a property in an area you aren’t familiar with.
Our rental calculator can give you a guide to the typical rent you might expect to achieve from your buy-to-let property.
Bear in mind, however, that the actual amount you’ll be able to charge will depend on several different factors. These include the type and condition of the property and where it is based. For example, is it close to public transport, schools, shops, and parks? The closer you are to amenities, the more your property is likely to appeal to tenants.
You’ll also need to decide whether you’re going to let out the property furnished or unfurnished. If, for example, you’re including all appliances and full furnishings, you may be able to charge a slightly higher rent than if you’re letting it completely unfurnished.
It’s often a good idea to talk to local letting agents to get a feel for the rental market in the area, and to see how much landlords letting out comparable properties are charging.
Our rental calculator uses industry data to look at the typical rent you might expect from a property at a particular postcode. They are based on last known rental prices and inflation figures. However, they should not be seen as a substitute for a professional valuation, or used as a basis on which to sell, buy or let a property.
When deciding the rental value of your property, you’ll need to make sure that the rent you charge will not only cover your buy-to-let mortgage repayments, but also that it cover your other costs such as maintenance and insurance. Buy-to-let mortgage lenders will usually want the rent you charge to cover at least 125% of the mortgage payments.
You’ll also need to consider what sort of rental yield you expect to achieve. This is the amount of income you’ll receive from your tenants over a year, shown as a percentage of the amount of money you’ve invested in the property. The higher the rent and the lower the purchase price, the higher the rental yield will be and vice versa.
Rental charges can vary in every area depending on the type of property that’s being let, its condition and its proximity to local amenities. For example, if you’re letting out a property that’s close to good schools and public transport, you can expect to charge higher rent than if the property is further away. The average rental value will also depend on tenant demand in that particular area.
The L&C rental calculator can give you a rough estimate based on your address and postcode as to how much you should be able to charge. You should always do your own research too, for example, by asking letting agents about typical rents charged. Property websites such as Zoopla and Rightmove can also give you an idea of the sorts of rents being charged in your area.
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