Setting the right market rent

Rent setting is an arithmetic problem disguised as a judgement call. The right figure is the one that maximises collected rent across the year after voids, arrears and turnover costs, not the highest

5 min read · Updated 22 August 2026

Overview

Rent setting is an arithmetic problem disguised as a judgement call. The right figure is the one that maximises collected rent across the year after voids, arrears and turnover costs, not the highest number a portal listing can display.

Why it matters

Two weeks of void wipes out most of the gain from an ambitious increase, and a stretched tenant is the most expensive tenant you can have.

Legal requirements

Rent must be set and varied in line with the tenancy agreement and statutory notice rules.
Advertised rents must not be misleading about what is included.
Discriminatory pricing or blanket bans on benefit claimants risk unlawful discrimination.
Only one rent increase is permitted in any twelve month period under the current framework.

Common mistakes

Pricing from asking rents rather than agreed rents.
Ignoring the cost of a void when chasing an extra twenty five pounds a month.
Setting rent by yield target rather than by market evidence.
Failing to review rent at all for years, then attempting a large correction.

Practical guidance

Collect five agreed lettings within half a mile from the last three months.
Model the annual income at your figure with a two week void, and at a lower figure let immediately.
Adjust for condition, energy rating, parking and furnishing rather than guessing.
Review annually and move in small steps so no single increase is a shock.

The void arithmetic

On a rent of twelve hundred pounds a month, one extra void week costs about two hundred and seventy pounds. An increase of twenty five pounds a month earns three hundred pounds a year. So a single extra week of empty property cancels most of the gain, and three weeks turns it into a loss. Price to let quickly and increase steadily instead.

Pricing for tenant quality

A property priced at the very top of its bracket attracts applicants who are stretching. A property priced a little inside the market attracts choice, which lets you select on affordability and references. Over a five year hold, tenant selection affects your net return far more than the headline rent.

Frequently asked questions

Where can I find agreed rents rather than asking rents?

Local agents will share recent lettings, and portal listings that have been removed quickly are usually agreed near the asking figure.

Should I include bills?

Only if the market for your property type expects it. Bills inclusive lets need a fair use clause and careful budgeting.

How often should I increase rent?

Annually and modestly is easier for tenants to absorb and less likely to be challenged.

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This guide is general information for UK landlords and letting agents, not legal advice. Rules differ across England, Wales, Scotland and Northern Ireland, so check your local requirements or take advice before acting.