In the perfect world, the right rent for your room would be the amount that would make you the most money. Unfortunately, the reality is that in the popular and growing industry of flat sharing, tenants have the freedom to choose from many different rooms across the UK, so you have to set your rent accordingly. The simple rule here is that the most desirable rooms get taken very quickly, and one key aspect that forms part of a desirable room is the rent.
If you have had a room on the market for some time now and you have not managed to fill it with a lodger or flatmate yet, one of the key reasons may be the rental price on offer. The difference between success and failure for your flatshare often hinges on charging the right price for your room.
Your goal here as a landlord taking in a lodger or flatmate is to set the most attract rent that will enable to rent your room quickly, cover your expenses and enable to make some extra cash from renting. Inflating the rental price and charging too much can make your room unattractive to potential tenants and lead to an on-going empty room. Charging too little can eliminate the potential profit you could make and put strain on your financial position.
By following the basic tips below, you can try and establish a price that will become a suitable medium between the lodger / flatmate and landlord.
Here are some tips before finalising the rental price:
Do your research before deciding the rent to charge for your room. Visit specialist flatshare sites such as EasyRoommate & Spareroom and take a look at other landlords with similar rooms in the same area. Most of these websites even provide you with an up to date flatshare rent index for your city which can be a good starting point, as the rents on offer can vary massively from London to Birmingham.
You may even want to visit other properties as a potential lodger or flatmate or even consider contacting estate agents who are holding specific room properties to gain more information. If you do make the time to organise a visit, ask the landlord if there is a high interest in the room and how quickly do they go. It’s all good pro-active and speak to other landlords within the market and specifically within your area to ensure you are offering a fair price. Once you have reviewed some of these factors, you can adjust your rent accordingly.
Gain a good understanding of where your room in located in comparison to local amenities. You will often find that rooms that are closer to transport links such as bus stations, tubes or over ground stations are much more popular and can often have a higher rental price. Have a think about your specific area and in particular some of the following questions, which could allow you to make a better decision on your rental price:
- Are there transport links close by?
- Are there health clubs or gyms close by?
- Are there cinemas, bars and restaurants close by?
- What is the type of area? Is it trendy, buzzing, quiet?
- Are there local supermarkets, shopping centres or high street shops close by?
If your room does not have the location or amenities to justify the rental price, prospective lodgers or flatmates will have no desire to see your property. If your rental is priced too low for the area, believe it or not, people will not come because they may think something is wrong with your room. They key to success here it to find the perfect price point.
3. Demand & Supply
Each time you advertise your room, which could be every 6 or 12 months depending on your current agreement with your tenant, you should think twice about charging the same rental price each time. Take into consideration the overall flatshare market and adjust your rent based on the demand & supply.
For example, according to EasyRoommate.co.uk the average cost of renting a room in a student flatshare across the major British university towns has risen 8.5% over the last 12 months from £329 per month to £357. The growth between 2011 and 2012 was 5%. This higher rate of growth has been at least partly spurred on by extra demand created by higher student numbers and increase in number of student applications across the UK.
The basic rule here is that when there is greater demand for room rentals, you can take this into consideration and charge a higher rent. When there is less demand, you may have to lower the rent to attract more lodgers or flatmates.
Ultimately, at a minimum, the rent you charge for the room should be able to cover your expenses whether your a live-in or live-out landlord. Make a list of your current expenses and you may want to ensure that the rent you offer covers of some of the following areas:
- Mortgage repayments (if applicable)
- Maintenance & repairs (current or future)
- Vacancy costs
- Bills – Water, TV, Gas, Phone, Electricity, Council etc.
- Profit – How much do you want to make above the minimum?
5. The Package
Have a think about what you would like to offer to the tenant as part of the rent price as a package, for example, a double room with built in wardrobes and ensuite will typically have a higher rental price that a standard double room in the same area. Some of the other questions you make want to think about is:
- Are the bills inclusive?
- Do you have parking available?
- Have you recently renovated or updated the property, for example, with new appliances or wood flooring?
- What is the size of the room?
- Are you looking for a couple or single occupant?
If this is your first time your are considering to rent out your room, have a read through the top tips for taking on a lodger for the first time.