How to Know If Your Rent Is Correct

"It went up to 60 thousand in our street" is the most heard and least useful sentence in rental negotiations. A listed price does not mean that rent is actually being paid. The right question is: for homes of similar features in the same neighborhood, what amount was actually signed for recently?

The difference between the listed price and the actual rent

A listing price is a wish, a signed contract is a fact. The difference between them varies by region and period; in periods when demand weakens, listings sit for months without being updated and make the market appear higher than it is. Therefore, a serious market value study relies as much as possible on closed contract data.

Why median and not average?

Let nine out of ten rentals in a neighborhood be 30 thousand, and one be 120 thousand. The average comes out to 39 thousand — yet no housing sees that money. The median, however, is 30 thousand and accurately describes the market. Since the median shows the value right in the middle of the ranking, it is not affected by a few outrageous listings.

A single outlier listing is enough to ruin the average. To ruin the median, half of the data must change.

What does the width of the range tell you?

In market value studies, a range with lower and upper limits is given rather than a single figure. The real information is often hidden in the width of this range.

• Narrow range: the housing stock in the neighborhood is homogeneous, pricing is settled. Negotiation margin is low.
• Wide range: building age, facade, and equipment differences are large. Proper positioning makes a serious difference.

Criteria used in selecting comparables

• The same neighborhood and, if possible, the same street group
• The same number of rooms and similar gross area
• Close building age and the same heating system
• Floor and facade similarity — intermediate floors and south-facing units tend toward the upper range
• Whether it is within a gated community; parking and security directly reflect on the rent
• Whether it is furnished and who pays the maintenance fee (aidat)
• That the data is recent — a contract from a year ago does not reflect today's market value

The hidden cost of high pricing

An apartment priced ten percent above market value sits empty for an average of several months extra. One month of vacancy is one-twelfth of the annual rent; a requested ten percent extra is one-tenth of the annual rent. Roughly speaking, for an apartment remaining vacant for two months, asking extra rent loses its meaning.

The cost of low pricing is more insidious: once the contract is established, the increase remains tied to the CPI ceiling. In other words, a rent that starts low stays low for years, and the gap can only be closed through a rent determination lawsuit once five years have passed.

What applies in a rent determination lawsuit?

In contracts completing five years, if the parties cannot agree, the court determines the market value. The expert collects regional comparables, examines the property's condition, and arrives at an amount by applying a fairness discount. Here too, what is decisive is not listings, but signed contracts.

If you want to see current ranges for your own property based on neighborhood and room count, you can use our rental market value tool, and get a free opinion from our team for a property-specific valuation.