How much rent should I charge? Three ways to decide

To decide how much rent to charge, start with what comparable properties nearby have actually let for, adjust for the differences between them and yours, and set your asking rent within that range. Then check it against two numbers of your own: the cost floor, which is the rent you need to cover the mortgage and running costs, and the rent you need to reach your target yield. Finally, make sure the figure respects any local rent rules. The market sets the price; your numbers tell you whether the property works at that price.

Rent rules differ widely between countries and cities, especially for new lettings in high-demand areas. Treat this guide as a general method, check the rules where your property is and ask a local professional if you are unsure. The worked example uses euros and hypothetical figures; the maths works the same in any currency.

The numbers that decide your rent

Number	What it tells you	Who sets it
Market rent	What tenants will pay for a property like yours	The local market
Cost floor	The rent you need to cover all costs, including the mortgage	Your purchase and financing
Target-yield rent	The rent you need to earn your required return	Your investment goals
Legal limits	The maximum you may charge, where rules apply	Local law

The market rent decides what you can ask. The other numbers decide whether you are happy with it, and the legal limits can override everything else.

Step 1: find the market rent from comparables

Collect at least four or five comparable properties: same area, similar size, type and condition.

Where to look:

• Achieved rents. What similar properties actually let for. Local letting agents, other landlords and your own previous lettings are the best sources.
• Current listings. Useful, but they show asking rents. Note how long each has been advertised; a listing that has been online for weeks is probably priced too high.
• Official or reference rents. Some cities and regions publish rent indices or reference rents. Where they exist, they are an important benchmark and sometimes legally relevant.

What to adjust for:

• Size and layout (number of bedrooms matters more than a few square metres)
• Condition, kitchen and bathroom quality
• Floor level, lift, light and noise
• Outdoor space, storage and parking
• Energy efficiency and heating costs
• Furnished or unfurnished, and whether any bills are included
• Exact location: transport, schools, shops

Rent per square metre is a helpful cross-check, but tenants compare whole homes, not square metres. A small flat usually achieves a higher rent per square metre than a large one in the same building.

Worked example: a 65 m² flat with a balcony

Comparable	Size	Notes	Rent per month	Status
A	62 m²	Similar condition, no balcony	€990	Let
B	65 m²	Similar condition, balcony	€1,040	Let
C	70 m²	Older kitchen	€1,010	Let
D	68 m²	Renovated, balcony	€1,090	Advertised for 5 weeks

Comparable B is the closest match at €1,040. A has no balcony and C an older kitchen, so your flat should rent above both. D is still empty after five weeks, which suggests €1,090 is above what the market accepts. A realistic range is €1,020 to €1,040; the example landlord settles on €1,030.

Step 2: calculate your cost floor

The cost floor is the rent at which the property just breaks even, including the mortgage and an allowance for empty periods:

Cost floor = (monthly mortgage payment + monthly running costs) ÷ (1 − vacancy allowance)

Running costs are everything you pay as owner and cannot pass on to the tenant: non-recoverable service charges, insurance, property taxes that stay with you, a maintenance reserve, management and letting fees.

Example: the flat cost €190,000. The owner borrowed €114,000 over 25 years at a hypothetical 4%, a payment of €601.73 per month. Running costs are €300 per month, and the owner allows 5% of the rent for vacancy.

Cost floor = (€601.73 + €300) ÷ 0.95 = about €949 per month

At €1,030, the property covers its costs with about €80 a month to spare. Our guide to rental property cash flow shows how to build this calculation line by line and stress-test it.

If the market rent is below your cost floor, raising the asking rent rarely solves it. Tenants compare your flat with the alternatives, not with your mortgage. The fix lies in the financing, the costs or, before you buy, the price.

Step 3: check the rent against your target yield

The cost floor says whether you lose money each month. The target yield says whether the investment is worth it. To find the rent that delivers a target net yield:

Required monthly rent = (target net yield × total purchase cost + annual running costs) ÷ (12 × (1 − vacancy allowance))

Example: total purchase cost is €190,000 plus €15,200 in purchase costs, so €205,200. The target is 4% net, and annual running costs are €3,600.

Required rent = (0.04 × €205,200 + €3,600) ÷ (12 × 0.95) = €11,808 ÷ 11.4 = about €1,036 per month

At €1,030 the flat almost exactly meets a 4% target. You can test other rents, costs and financing in the rental yield calculator. Whether 4% is the right target for you is a separate question, covered in what is a good rental yield.

Step 4: check local rules and limits

Before you advertise, find out whether any rules limit the starting rent where your property is. Depending on the country or city, they may:

• Cap new rents against official reference rents or a rent index
• Limit the rent of a new letting to the previous tenant's rent, with exceptions
• Restrict rents for properties with poor energy ratings or in certain housing programmes
• Prohibit rents that are excessive compared with local levels

These rules can change, and some apply only in designated areas. Check with the local authority, a landlord association or a lawyer if anything is unclear.

Step 5: price to let quickly

The last few euros of rent are rarely worth an empty month. Every month without a tenant costs a full month's rent, about 8% of the annual income, plus utilities and running costs you now pay alone.

Example: you could advertise at €1,080 instead of €1,030. If the higher price adds just one empty month, you lose €1,080. At €50 extra per month, it takes about 22 months to win that back, and many tenancies do not last that long without a review.

Asking rent	Extra per year	One extra empty month costs	Months to recover it
€1,030	–	–	–
€1,055	€300	€1,055	about 42
€1,080	€600	€1,080	about 22

A rent at or just below market also brings more applicants, so you can choose more carefully. A good tenant who stays for years is worth more than a high rent that keeps changing hands. Our tenant screening checklist shows how to use that choice well.

Test the market

If you are unsure, advertise at your chosen figure and watch the response in the first week or two. Plenty of enquiries and viewings from suitable applicants suggest the rent is right or slightly low. Few enquiries suggest it is too high, or that the listing itself needs better photos or a clearer description.

Think about the next rent review now

The starting rent is the base for every future change. Where increases are limited by law or by the contract, a rent set well below market can be hard to correct later, while a rent set above market leads to vacancy and turnover. Decide now how you will review the rent, whether by a market-based review, fixed steps or an index clause. Our guides on how to raise rent and the index-linked rent increase explain the options.

What is included in the rent

Be clear about what the rent covers, because it changes the comparison.

• Furnished or unfurnished. Furniture can justify a higher rent but adds replacement costs and wear.
• Bills included. If you include utilities, internet or service charges, compare with similar "all-inclusive" listings, and budget for higher use.
• Parking, storage and garden. Price separately where that is usual locally, or add them to the comparison.
• Service charges and advance payments. Where the tenant pays running costs on top of the rent, compare the base rent with base rents, not with totals.

Common mistakes

• Setting the rent from your mortgage. Tenants do not care what you paid.
• Copying the highest listing. Asking rents are not achieved rents, especially for listings that have been online for weeks.
• Ignoring differences in condition, layout and features.
• Forgetting vacancy and running costs in the cost floor.
• Overpricing by a small amount and losing a month's rent.
• Not checking local rules before signing a contract.
• Comparing totals with base rents when service charges or bills are paid separately.

Checklist: setting the rent

• At least four comparable properties, with achieved rents where possible
• Adjustments for size, condition, features and location
• Cost floor calculated, including mortgage, running costs and vacancy
• Target-yield rent calculated
• Local rent rules checked for new lettings
• Clear statement of what the rent includes
• Plan for future rent reviews

Key takeaways

• The market sets the rent; start with achieved rents for comparable properties.
• Check the figure against your cost floor and your target-yield rent.
• If the market rent is below your cost floor, asking more will not fix it.
• Respect any local limits on new rents.
• Price to let within a few weeks: one empty month can outweigh a year of a small premium.