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Becoming a Letting Agent - Knowing Local Rent Levels
As explained in our previous article, initial research is a vital stage in setting up a letting agency business. Below we summarise the easiest way to familiarise yourself with important information about local rental levels.
Rentals for various types and sizes (by number of bedrooms) of property vary greatly from area to area throughout the country, therefore you will need to discover the rental levels that apply generally in your intended working area before starting a letting agency in your local area.
It will be part of your service when running a letting agency to provide a rental appraisal (approximate rental valuation) of a property to be let for your landlord client. A landlord will respect your opinion of the rental his property is likely to attract, and this will often be one of the first questions on his mind.
An of course, offering the property at a realistic market rental rather than overpricing it will make all the difference between letting it speedily, or having it hanging around for weeks - a situation which benefits no-one.
Don’t worry, you won't need to be precise with your valuations. In fact there is no such thing as a precise valuation, as various local agents will have slightly different ideas on the same property.
Sourcing the information
The internet: By far the speediest method of gaining an overview of local rental levels is to search on rightmove.co.uk or zoopla.co.uk for properties to let in your town. Take a copy of the ‘Research Sheet – Average Local Rental Levels’ and starting with studio flats, enter the advertised rentals following the instructions on the research sheet.
Then do the same with 1, 2, 3, 4, and 5 bedroom flats and houses. We suggest that you complete at least 3 sheets, so that you are comparing about 45 properties of each size, totalling them all onto the last sheet.
When you have completed the research sheets, and used a calculator to work out the average rental as we explain, you will arrive at 6 figures: the average rentals of each size of property according to number of bedrooms, i.e studio flats through to 5 bedroom properties. These 6 figures really are the only ones you need to commit to memory before starting a letting agency business in your area.
When you value a property, you'll use these figures as a basis from which to work, and make a small adjustment (say between 5% and 10%) either up or down, depending on whether or not the property is furnished, its general condition, location in a nice/not so nice road, and proximity to transport, shops and other local amenities which tenants favour.
Although this research may seem somewhat laborious for anyone setting up a letting agency, it is nevertheless a vital stage in becoming a letting agent, and will make all the difference between groping around in the dark and making elementary mistakes, and getting things right from the word go.
The average figures arrived at on your research sheet, combined with these adjustments, will enable you to give quite accurate valuations right from the start. And remember, there is no such thing as a precise valuation, as different agents will have slightly varying opinions. You can read more about rental valuations in Section 5 of the Southcourt Letting Agency Manual.
Posted: October 2011
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