How Much Should I Charge for Rent?

How Much Should I Charge for Rent

Renting a property is common, but before charging rent, you need to be aware of some things to consider regarding rent charges. Let’s get to know about it.

Setting the correct rent price is essential but deciding how much should I charge for rent is difficult. Understanding that selecting a cost-competitive rental price to draw tenants and beneficial for one’s property is essential for an independent landowner’s success. For various reasons, renting a property may make more sense. Properties can be difficult to sell.

If the landlord hasn’t built sufficient equity in their property, selling may not be a solution. They may utilise their equity to put a down payment on a new property if they’re planning to buy one. Below, You can read more about locating the perfect spot for your property’s rental pricing, along with advice on receiving a reliable rent estimation and why it’s crucial to consider amenities when determining the rental rate.

Importance of Charging Correct Rental Rate for your Property

Establishing an exact market rent will make it much simple to immediately pull good renters who might pay their rent on time and extend their contract for years. However, the tenants will start looking elsewhere if the property rate is too high, leaving the unit empty for months.

The importance of charging the correct rent is as follows:

Right tenant

If the property’s rent is too low for the location, the landlord might not be able to find the right tenant. If your rent is costly, you might not be able to find any renters at all and face the risk of missing out on money each month. Finding the ideal fair market rent—neither too expensive nor too low—is a landlord’s duty.

Payment on Time

Considers the neighbourhood’s population’s average salary when choosing your property’s location. So that you can easily fill the space and stop worrying about whether tenants will pay on time, your rental pricing should adjust to attract potential tenants with corresponding salaries.

Covering Other Costs

Property is an asset; if their rental income is insufficient to pay for the property’s expenses, their rent rate isn’t appropriate.

Calculating the Correct Amount of Rent

For different Indian cities, the typical rental yield varies from 2% to 4%. The amount of the rent is affected by several aspects and situations, including the market ratio, market conditions, tax on rental earnings, renter profiles, and the asset worth of the property.

Steps that follow the calculation of the rental rate:

  • Before renting out the property, conduct rental market research and compare your estate according to the years of the building, floor design, the number of rooms and bathrooms, landscape, etc., to determine the appropriate rent.
  • Compare the features of the property with other properties in the market, including the parking space, residential area, storage capacity, flooring, furnishings, and equipment, as well as the sight of the property.
  • To determine the appropriate amount of rent, add up the maintenance costs and other property-related expenses.
  • Follow up on the feedback to the real estate marketing. If there are a lot of applications, the rent requested is reasonable, and the tenant should be able to rent the property.

How Much a Month’s Rent Can You Demand?

Before buying a property, the landlord must first understand the state of the local rental market.

  • Are rents growing or declining?
  • Which neighbourhoods have the highest demand, resulting in yearly rent increases?
  • What educational districts are in the greatest demand?

With this knowledge, the landlord can determine whether the current or prospective residence is in a favourable location, enabling one to demand greater rates than the other areas of town.

If the residence is in a good and in-demand area, it may indicate its value will increase over time. It will be simple to decline the transaction and accept another in a better area if tenants find the possible property is in a less-than-ideal location. Rental income is based entirely on location.

Factors to Consider before Renting Out the Property

There are several factors to consider when figuring out what rent to charge. Finding out how much the property value in the market is an important step, and the sum might not match the purchase price of the property.

You should also consider what other local landowners are asking for units comparable to the respected property and the home’s value. Finding a renter who would agree to the terms and conditions may be difficult if the landlord wants to charge too high compared to other rental properties in the neighbourhood.

Before deciding on the appropriate rental price for the property, there are many factors to think about.

1% rule

The landlord should use the 1% rule when estimating the property’s value, particularly if the landlord owns a home and intends to rent out individual rooms. The rent on the home should, in starting, range from 0.8% to 1.1% of the property’s overall market value.

For instance, if the worth of your present home is Rs.500,000, you should set your monthly rental rate between Rs.4,000 and Rs.5,500.

Competitors Around

It is crucial to research the homes in the neighbourhood and surrounding area. This kind of study will support setting the rental charges.

  • They probably charge less per unit than an opponent if they provide more common and in-unit facilities.
  • Set a higher rental price than the rivals if the property offers more in-unit and common amenities.
  • Consider charging the same price as the competitors if they offer the same facilities or better in-unit amenities than respected property.

Seasonal Variation

Depending on the season, tenant competition varies greatly across the country. Predicting these seasonal variations is necessary. Every year, there is an increase in apartment searches in December and January, and July is the busiest month for searches. The moving season grows significantly from February to June, with peaks from August to August.

Market Economy

The local economy impacts tenants more than the overall economy, and recessions barely impact some cities’ rental markets. Therefore, conduct more in-depth market research in the area where the property resides to understand better and forecast the rent prices. You should establish monthly or even weekly.

Parking Area

Some potential tenants have deep feelings about their vehicles. Try to incorporate the cost of the parking area in the total rent rather than charging extra for providing it for all renters. Charge more for reserved places or sheltered parking if there is a limited supply of the above.


A feeling of safety is important for every tenant; generally, it matters for women. Indicate openly whether the property has high-tech features or not. Make it clear to the tenants if the residence has security cameras, hires a private security firm, or has gated entry for cars and residence access.

Rent Control Act in India

The government passed a law called the Rent Control Act in 1948, which governs the rules for renting property and ensures another violates neither the rights of the landowners nor the tenants. Each state has their own Rent Control Act, which is generally similar to one another, but they have slight differences.

The 1948 Act’s strict requirements and approach in favour of tenants have made it impossible for the real estate sector in some regions to expand. Despite inflation and rising property values, some premises rented out since 1948 continue to receive the same rent.

Non-applicability of the Act

Some scenarios where the rent control act is not applicable are as follows:

  • Rental properties are given to privately owned or public enterprises with paid-up shareholding of at least Rs 1 crore.
  • Property leased or subleased to banks, corporations created under state or federal law, or public sector operations.
  • Property rented to foreign businesses, missions abroad, or international organisations.


To determine how much should I charge for rent, the landlord should always check out the market and prices of the neighbourhood properties. Use this information as a starting point to determine how much other landowners are asking for similar properties. Setting the appropriate rental rate is the aspect of running a profitable business.

Consider the property’s most distinctive and beneficial facilities or characteristics in the rental listing. The landlord might even consider including one of these in the headline for the listings.

To set a rental rate, landlords must consider various criteria, including competition, the market value of comparable properties, and the worth of the property. A rental income if they set a reasonable asking price and carefully verify prospective tenants.


What types of documentation are required to rent out the property?

Before renting the property, the tenant must draft a rental contract and collect the applicant’s name, address, and proof of income.

How to calculate a room's rent?

The best way to calculate the rent for a room is to use the square footage they will occupy. The monthly rental price can calculate by dividing the total square footage (personal and common space) by the number of people.

What price range should I set for the property?

Expenses, property worth, and market value should all consider when determining the rental rate. Typically, landlords demand 1% to 2% of the property’s worth.

How much rent must I collect to make a profit?

It relies on a few things, like the amount of the property’s monthly mortgage payment and additional costs like maintenance and insurance.