How is the rental value determined in a Guaranteed Rent Scheme?

How is the rental value determined in a Guaranteed Rent Scheme?

As regular visitors to this blog will be aware, there are many advantages to signing up for a guaranteed rent scheme if you’re a private landlord. Not only do you get the peace of mind that comes with a consistent source of income, regardless of whether your tenants are paying or even if the property stands empty, but you’re spared the hassle of dealing with maintenance, inspection, minor repairs, and day-to-day tenant enquiries.

Of course, all of that convenience comes with a price, and with a guaranteed rent scheme, that cost is that the income you receive through your letting partner is typically less than you might be able to make on the open market. So, how is the rental value you receive worked out?

In this article, we look to answer that question for landlords in the London area. Let’s start with the basics.

Rental Expectations

As a private landlord in one of the world’s most populous capital cities, you can, of course, charge what you wish for rent. With roughly one in three of London’s 9 million residents living in privately rented accommodation, there is always a demand for properties. However, as with any commodity, market forces can determine how much people are willing to pay, and this could put a damper on your hopes. While you could, in theory, rent out your property at higher than the market rate, with the right connections or particularly targeted advertising, under a guaranteed rental scheme, your letting partner is unlikely to be prepared to take that risk.

Property evaluation

Our first step will be to conduct a physical inspection of the property to see if we would be interested in managing it for you. This is to confirm that it is in a liveable condition, how many people it can reasonably house, whether it needs any essential repairs and upgrades, and whether it has any features that will affect its rental value.

Location

While the city as a whole is significantly more expensive for rental properties compared to the rest of the UK, prices are not consistent across the capital. As a general rule of thumb, the closer you are to the centre, the higher the average rent, but certain other factors can impact the cost from one borough to another.

Market Analysis

Once we’ve assessed the property’s condition and location, we can better determine a likely rental value. By analysing current and historical market trends, we’ll establish a typical rent for similar properties, forming the basis of any agreement we reach.

Guaranteed Rental Income

Based on these three criteria, our experts will work out the optimal rent that such a property is likely to command under current conditions. This is the amount that the tenants would be expected to pay to us as part of their rent agreement. We will then deduct our own costs in exchange for the service our landlords receive from us—locating tenants, running and organising inspections, performing general maintenance and minor repairs, and so on.

The resulting figure will be the amount of money you receive as a landlord. Less than you might make by going solo, certainly, but also guaranteed, whether you have a tenant in place or not, and without the hassle that comes with day-to-day management.

Guaranteed Rental Agreements for London Properties

If the idea of a Guaranteed Rental Agreement with a well-established and experienced property management firm appeals to you, contact Abel Living today. Call us on 020 3924 4001 to for a free consultation with one of our industry experts.

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