Do you want to know what you should be charging for rent? If you set your rental price too high, you could narrow your market too much – especially if there are lots of competitively priced properties available to rent in your area – this could leave you with an empty property and a mortgage to pay with no income to cover it. On the flip side, if you set your rent too low you risk not making a return on your investment or even making a loss.
It is therefore essential to set a rent level that not only attracts and retains tenants but also covers your mortgage and provides you with a good return on your investment as well.
So, how do you make sure the price you charge appeals to your target tenant? You check out what everyone else is charging of course!
It can be quite a time-consuming job trawling through all the online and local newspaper listings to find out what rents are being charged in your area, so it is really handy when the data is collated and published monthly as with the HomeLet Rental Index, which has just published the following data for November…
The average rental value in the UK
According to HomeLet’s data – which is based on around 1 million references processed each year on behalf of UK Letting Agents – the average rental price for a new tenancy in the UK in November was £974 per calendar month (pcm) – the highest rate the index has ever reported and up by 2.9 per cent on last year.
The average rental value outside of London
When London is excluded, the average rent in the UK has risen to £828pcm, this is up 0.9 per cent from last month and 5.6 per cent from last year. So, rental prices are broadly growing in areas outside of London.
In fact, nine of the twelve regions monitored showed an increase in rental values between November 2019 and November 2020, with the South West seeing an increase of more than 8.6 per cent with an average rental price of £910pcm. Is everyone heading for the coast, we wonder?
The South West was followed by East Midlands with an annual increase of 7.3 per cent to £689pcm then Wales, home to Mumbles, the happiest place to live 2020, took third place with an increase in rental value of 6.8 per cent and the average rent growing from £630pcm in November 2019 to £673pcm in November 2020 (see the table below for data from other regions).
Rental figures from the November 2020 HomeLet Rental Index
The average rental value in London
2020 has produced mixed data as to whether tenants are abandoning London for the suburbs or not. This month’s figures from HomeLet certainly show that London is struggling to hold onto its premium rental values with average rents in London falling year-on-year (YOY) by 4.4 per cent between November 2019 and November 2020, the sixth decrease in annual variance in subsequent months.
However, the average rental value in London of £1,576 is still 90.3 per cent higher than the rest of the UK (excluding London) of £828, so there is obviously still demand for rental properties in our capital city.
Commenting on this month’s data, Andy Halstead, chief executive at HomeLet & Let Alliance, said: “Outside of the capital we’re seeing UK rents rise at the highest rate we’ve ever reported, yet in contrast rents in London are now decreasing at the highest rates that we’ve ever reported.
“Whilst the trend is being driven by the increase in people working from home and tenants looking for properties with extra space, both inside and outside the property, we may also be seeing the continued impact of Brexit on central London.
“We’d also expect that demand for property in less built-up areas, which are commutable to urban centres, will continue to increase across the country,” he predicted.
If you’d like to dig deeper into the data, HomeLet’s interactive map provides even more refined area breakdowns and lists London borough statistics individually, so is worth a visit.
You can also find out the market price for your rental property by getting a few valuations from your local letting agents.
How do you choose your rental price? We’d love to hear!