Market rent: What does it mean & how do I work it out?

In practice, market rent is whatever tenants are willing to pay for your property. You can’t just pick whatever price you want. Prospective tenants may have limited budgets and plenty of options to choose from.

And if there are properties similar to yours that are cheaper, tenants may bypass yours and go for the more affordable option. If you raise the rent too much, current tenants can also ask the Tenancy Tribunal to review and lower it. They may also choose to leave and extended vacancies may follow. 

That’s why it’s so important to calculate a fair rent for a property before you start looking for tenants.

Most landlords want to charge as much rent as possible while still attracting good tenants. To do this you need to work out what a fair market rent is for your property - here’s how:

1. Visit trademeproperty.co.nz and click ‘for rent’.

2. Input filter details to match your property including region, city, suburb, bedrooms, bathrooms and property type.

3. Once you've got your results you can view properties similar to yours - you can do this in either map or list format. Map format makes it easy to view the properties closest to you, while list format is easiest for quickly scanning all the results.

4. Compare your property to other similar properties to figure out what a fair market rent might be. When comparing, look at everything that tenants may value, including the number of rooms and the age of the home. 

If your home offers more than similar properties you may be able to price it slightly higher. If it offers less you may want to consider asking for less rent. After looking at other homes like yours, you will have a better idea of where your property stands in the market. This will help you determine how much you can ask for it. 

Countless factors affect the amount of rent you can charge. We’ve ranked them from most important to least:

Location affects rent more than any other factor. According to Trade Me, the average weekly rent for properties in Auckland is $660. In Southland, the average weekly rent for properties is only $430. 

Prices in suburbs can also differ based on proximity to amenities like beaches, transport, schools, and restaurants. Location affects property value. 

Tenants generally care about bedrooms more than any other factor except for location when it comes to paying rent. As a general rule, if all other things are equal - more rooms equal more rent. 

If all other things are equal you can charge more for a standalone home than you can for a townhouse - and you can charge more for a townhouse than an apartment. 

If your home has the x-factor you may be able to charge more rent for it. For example, beautiful architecturally-designed homes, or properties with sea views may command higher rents.