A professional opinion of the Market and Rental Value. Calculate and decide on the rent you plan to charge your tenants.
Remember: A valuation is not a survey make sure you know as much as you can about the true condition of your building, property or future home before you commit to buy.
What is the purpose of a market rental valuation?
One of the most important decisions you will have to make when managing a buy-to-let property is determining the fair market rental value. Once you determine this calculation, it will help you decide on the rent you plan to charge your tenants.
A market rent valuation will provide a professional opinion of rental value for a property taking into consideration a number of factors, including comparing rental rates being paid for similar properties in the same area in the same condition.
A surveyor will take into account the prevailing rental market at the date of valuation and will objectively analyse and assess the relationship between occupiers, tenants and landlords in a market in order to come to an opinion of value.
What is Market Rent Value?
Market rent value is the amount of money a property would rent or lease for if it was available at a specific time.
It is an experts judgement based on knowledge, appraisal, intuition and comparison of the local rental market to discern a fair rental value for a property in the same condition in the same area.
The Definition of Market Rent
Generally, the accepted definition of market rent from the Royal Institution of Chartered Surveyors (RICS) and The International Valuation Standards Council (IVSC), is:
The estimated amount for which an interest in real property should be leased on the valuation date between a willing lessor and a willing lessee on appropriate lease terms in an arm’s length transaction, after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion.
Although the valuation will be based on objective analysis, it is important to recognise that the methodology behind it is not just a science, but an art, wherein the expertise and intuition of individual experts will play a part, hence why a Market Rent is a professional opinion of rental value.