How to calculate the ideal ‘letting price point’ for a property
There is no shortage of rental market information to help landlords. The trouble is it’s mostly national or at best regional, but what really matters is knowing the ideal ‘price point’ at which a property will let.
Getting it wrong can be costly and expensive; it’s not unusual to find properties that have spent months on the market and one apartment in Oxford we’re aware of started out at £2,200 in November 2012 and has been reduced three times since but is still on the market today for £1,800, a reduction of 18.3%.
But such radical reductions aren’t necessary if you get the price correct first time. As outlined in our monthly report ‘What to do if a property won’t let’ reductions of just a few pounds can transform an unwanted property into a lettings success.
Some homework using both the phone and internet will help calculate the right price point and to illustrate this we did some of our own. We looked at Guildford in Surrey and pretended we had a two bedroom flat to rent.
First all, a quick telephone chat with one of a local agent reveals that we’re in luck – two bedroom apartments are a third or more of the market in Guildford and rent, on average, for £1,650 a calendar month, they said. This is probably optimistic ‘talking up’ by the agent so let’s check Rightmove. Its listings show 119 two-bedroom apartments to rent from £840 to £1,895 a calendar month – or an average price of £1,235 (with only the last page of listings in the £1,650+ a month luxury market).
We found eleven properties to rent at between £1,200 and £1,250 (the ‘middle’) all of which went on to the market in either late April or mid-May with the exception of one, which had been for rent since February, according to Zoopla. Almost all were in the desirable central and western districts of the town.
If we want to undercut these and gain a quick let, therefore, one strategy would be to undercut this middle market by around £10 and offer our flat at £1,190, a market in which there are only four (rather than eleven) properties offered at the moment.