How does a premium letting agent decide upon a rental price for a unique property?
Although the premium rental property market is growing, having a rental property in the luxury market is still a comparatively new idea. These properties occupy a tiny percentage of those available. So, how can you make sure that you have an accurate valuation?
Although the premium rental property market is growing, having a rental property in the luxury market is still a comparatively new idea. These properties occupy a tiny percentage of those available.
Comparable evidence is one of the key components of valuing a property for rent, but in an emerging market, there are limited comparables to help you to decide on a price. And traditionally, properties at the higher end of the market are unique, meaning the available comparable evidence to support the property valuation is often varied.
When you set the rental price for your property, you want to ensure you are charging the going rate and not selling yourself short. After all, this property is intended to generate an income and, at the very least, cover its own expenses; otherwise, you would just leave it empty.
It is also important not to charge too much as this can put off prospective tenants, and you may find the property is empty for longer than you would like.
An accurate valuation is the only way to know for sure that your property will appeal to tenants and that you are not leaving money on the table by listing it too low. So, how can we ensure that you accurately set your unique property's rental price?
Comparable evidence: Although more challenging for properties at the top end of the market because there are fewer and many of the properties are unique, comparable evidence will still form the basis of the rental valuation. Looking at similar properties available and recently let can help you to gauge where the property sits on the market.
Find the upper and lower limit: Your comparable evidence will give you a price range with an upper and a lower limit. The next step would be to see where your property sits within this price range?
Demand: How many potential tenants are searching for a property like yours at this particular moment in time? If very few likely tenants are searching for a property like yours and the demand is low, you may need to consider a slightly lower asking rent. However, if there are many potential tenants, your target rent could be pushed to the higher end of the price range.
Desirability: Who will be the likely tenants? Does your property fit the target audience well, and will those potential tenants pay a premium price for a property like yours?
Square footage: Based on comparable properties in the market, it is possible to calculate the price per square foot for properties in your location. This way, you can assess the value of your property based on the number of square feet. Once you have the average price per square foot, you simply apply that to the square footage of your property.
Tweak here and there: Gather all of this information about the property and the market, and you can tweak the price here and there based on special features or furnishings that your property may or may not have when compared with other properties.
Price Brackets: Finally, consider how your property will be viewed by potential tenants when they are looking online, as 99% of property searches will start there. Property websites will organise searches using price brackets, so you might want to reduce or increase your price slightly so that your property sits in line with these preset brackets. If you list for slightly above or below a price bracket, you will reduce your potential market. The best bet is to advertise the property with round figures.
If you are considering renting a premium property out, contact our property experts for a guiding hand so you can be confident that the marketing price is accurate and the property will be rented well.
