How do I find out the rental value of a property?

Charging the correct rent for your property is vital. But how do you find out the rental value for one you’re interested in buying? Use our tips to help you find the rental value of a property.

Purchasing an investment property is a big decision, one that you aren’t going to take lightly. There are many factors involved, such as calculating Stamp Duty costs, deciding on the type of buy-to-let-mortgage, and working out how much tax you might be liable to pay.

However, the biggest question on the lips of landlords and would-be landlords surrounds the value. Not the property value, but how much you can expect to command in rent. The rental worth is likely to be the reason why you purchase the property or walk away from any potential deal.

How much it achieves in rent also plays a big factor with mortgage companies that use the predicted monthly rental as one of the barometers for the amount they can lend. That’s why it’s vital to understand how much your potential rental property could fetch.

We’ve put together a few tips on how to find a property’s rental worth and feel confident that you are investing in a good deal.

Speak to agents

There is nothing quite like speaking to an expert. Which is why you should pick up the phone and talk to a letting negotiator in the area you are interested in purchasing a buy-to-let property. The letting agent will be able to advise you on how much you can expect to achieve.

They will also provide a clearer picture of the overall area dynamics. Aspects like demand, demographics, and local amenities count towards how much you might receive and the type of tenants (professionals, students) that will be calling your rental property home.

Online valuation tools

There are plenty of free online valuation tools that provide a rental average of every property in the UK. While they might not have as much accuracy and depth as speaking directly with a negotiator, they still offer a good overall range of what you can expect to achieve.

Most tools only require you to input the postcode of the property to get an estimate. Use a few tools to get a clearer idea, as the prices can vary depending on where they pull the data from. For a more definitive answer, however, it’s probably best to consult your local agent.

Look on property portals

Property portals offer another avenue for finding out the rental value of a property. Search on Rightmove, Zoopla, OnTheMarket, Home.co.uk and Primelocation to see rental values for investment opportunities in the city or town where you are interested in buying.

By looking at similar properties in the same area, you will get a good idea about the value of a rental investment. If you’re purchasing a one-bedroom flat in Enfield, North London, using the portals will allow you to see the asking prices for every one-bedroom buy to let currently on the market in that area.

Some of them also offer extensive breakdowns on purchase and rental values. Just enter the postcode, and you will get a more in-depth overview than valuation tools provide, with average rent, median rent and average time on market for properties of all sizes.

You should even be able to find out information about how many properties are renting for £1k-plus, £2k-plus and £3k-plus etc.

Examine the condition of the property

Going on viewings and looking at the condition of the property will help you get an idea of how much you will be able to command in rent. If you’re viewing a new home, chances are that you will be able to charge at the higher end of the spectrum.

An older property that needs some work might mean that you’re looking at slightly lower rents in comparison to similar properties in the area with the same number of bedrooms. It’s good to strike up a balance — it’s not wise to pay a significantly higher price for a brand-new home if it will only command an extra £75–100 per month in rent.

Finding the right rent

Today there is plenty of transparency over buy-to-let property values. Whether it’s a quick call to the local agent, some online research, viewing the property, or a combination of all three, you should be able to find an accurate value.

An excellent rental value combined with a favourable purchase price should see you buying somewhere that offers a good yield. If all the elements align nicely, then you will be well on your way to making a solid investment that provides a strong monthly rental and rises in sale value in the long run.