There is much talk in the private rental sector about the perils of market interference. Whatever you believe about such policies, rents in Scotland are up 48% over five years and are borderline unaffordable for many would-be tenants. Despite this, landlords are often eager to drive their asking rents higher.
The Strategy of Setting Market-Level Rents
The perils associated with that are what I want to explore here. I believe the optimal strategy is to set the asking rent at the current ‘market’ level. By doing so, you’ll attract a steady stream of applicants and, soon enough, you’ll find one that fits the bill. The current market level, incidentally, is not the asking rent for similar properties which have been available on Rightmove for several months.
The Success of Fair Rent Practices
Many landlords adopt this strategy and, by and large, they fair well. Their tenants are happy in their homes, and they behave well so long as they’re treated respectfully. They pay their rent on time and stay until their life circumstances give them cause to move on.
Risks of High Rental Pricing
Landlords who routinely pitch their asking rents 10 or 20% above the market often have a different experience. Their properties lie empty for months at a time before they secure a tenant who is likely to disappear within a few months, sometimes before the start date of their tenancy. Since the choice of applicants was limited, the chances of a troublesome tenant are higher. If the asking rent was sufficiently high, default is likely. Someone who has no intention of paying their rent isn’t concerned about how high it is.
Recommendation for Landlords
Such a strategy is stressful and counterproductive. I’d recommend having an easy and profitable life. At least check with a local agent on market rent levels. I believe that asking for a fair market rent helps landlords and tenants, as well as alleviating homelessness in the community.
