Is making an offer on a rental property like “bidding” above the listed rental price?
Average rents in London have exceeded £2,500 for the first time as the demand for housing continues to outstrip supply – a scenario that’s being exacerbated by the cost-of-living crisis as tenants also grapple with a range of other costs rocketing like energy bills and grocery prices.
Amid these testing financial conditions and a competitive market, many tenants erroneously assume they will have to engage in a bidding war to secure a property – and to be successful they must bid above the listed rental price. While they can make an offer that exceeds this level, potential tenants typically choose to accept the listed price or negotiate with the landlord or property management company.
Making an offer does not automatically guarantee that you – the potential tenant – will secure the property. Rental negotiations aim to find a fair and mutually beneficial agreement for both the landlord and the tenant.
Several rounds may be required to reach a desirable outcome for both parties. If other potential tenants are in the mix one of two scenarios will occur: all potential tenants are asked to make a last and final offer unaware of what the others have offered, or they are told what other offers have been made and given the opportunity to exceed the highest one.
The most common reason for rental negotiations is to determine the rent amount and the terms of payment. Both landlords and tenants may have specific budget constraints, and negotiations can help to find a mutually agreeable rental rate.
It’s not just about the price. Lease terms can vary, including the duration of the lease, renewal options, and specific clauses within the lease. Negotiations allow both parties to customise the terms to meet their needs.
Making a successful offer
To be successful, your offer should consider a range of associated factors to make it sound and competitive, including:
- Budget: Determine how much you can comfortably afford to spend on rent each month. When calculating your rental budget consider your monthly income, expenses, and financial goals. Your rent should typically be no more than 30% of your monthly income.
- Length of lease: Short-term leases, such as month-to-month or six-month leases, typically result in higher monthly rent payments. Whereas, long-term leases, like one or two-year agreements, typically offer more stable rent payments, meaning landlords may be willing to offer a lower monthly rent.
- Start date: The flexibility of your start date may depend on your personal circumstances and how urgently you need housing. If you can be flexible with your move-in date, you may have more room to negotiate favourable terms or secure a property in a competitive rental market.
- Location: Factors such as proximity to amenities, public transportation, schools, and employment centres are critical in determining a property’s rental value. What’s considered a good deal in one location might not be the same in another, so it’s important to weigh the pros and cons of the area when making an offer.
It’s often beneficial to employ the services of a specialist like Simply London when searching for a rental property. We are familiar with the local market and can provide expert guidance throughout the process, so you can make a well-informed offer on a property.