How to Calculate a Fair Rent for Your Flat in Bangladesh

Setting the rent for a flat is one of the most important decisions a landlord makes, yet in Bangladesh it is often done by guesswork: "the flat next door gets Tk 25,000, so let's ask Tk 28,000 and see." Ask too much and the flat sits empty for months while the to-let sign fades. Ask too little and you lose money every month for years, because rent increases later are harder than getting it right at the start. Learning how to calculate a fair rent in Bangladesh is about finding the figure that is fair to the tenant, sustainable for you, and realistic for the market.

This guide walks you through a practical, step-by-step method: researching comparable flats, adjusting for size, floor, facilities and condition, checking the figure against your costs and your property's value, and then sanity-checking against the law and against what tenants will actually pay. You will find an adjustment table, a full worked example with the arithmetic shown, and a list of common pricing mistakes. The method works for Dhaka, Chattogram, Sylhet, Rajshahi, Khulna and smaller towns alike.

What Does "Fair Rent" Really Mean?

A fair rent is not the highest rent you could possibly get from a desperate tenant, nor the lowest rent that fills the flat tomorrow. It sits where three things overlap:

• Market rent: what similar flats in the same area are actually being let for (not just advertised for).
• Owner sustainability: enough to cover the running costs of the flat and give a reasonable return on the property's value.
• Legal and ethical fairness: consistent with the Premises Rent Control Act, 1991 and your agreement, and reasonable for the quality of what you are offering.

The Premises Rent Control Act, 1991 contains the idea of a "standard rent" and gives a role to the Rent Controller in disputes. In practice, most rents in Bangladesh are agreed between landlord and tenant based on the market. If you ever expect a dispute about the level of rent, speak to a lawyer about how standard rent is determined for your property. For an overview, read our explainer on the Premises Rent Control Act 1991. This article is general information, not legal advice.

Step 1: Know Exactly What You Are Renting Out

Before comparing with anything, write down the facts about your flat. Tenants compare these points, so you should too.

• Size in square feet (usable, not just the developer's "saleable" figure if very different)
• Number of bedrooms, bathrooms and balconies
• Floor, and whether there is a lift and a generator backup
• Gas connection: line gas, cylinder, or none
• Water supply reliability (WASA line, deep tube-well, storage tank)
• Parking space: included, available at extra cost, or none
• Age and condition: kitchen, bathroom fittings, tiles, paint
• Furnishing: unfurnished, semi-furnished (cabinets, geysers, ACs), fully furnished
• Security: guard, CCTV, intercom, gated entrance
• Location factors: distance to main road, schools, markets, offices; waterlogging in monsoon

Step 2: Research Comparable Flats

Comparables ("comps") are flats that a tenant looking at yours would also consider. Aim for at least five to eight.

Where to find comparables

• To-let signs within walking distance — call and ask the rent, size, floor and service charge.
• Online listing sites and Facebook groups for your area.
• Caretakers and building managers of nearby buildings, who often know the actual agreed rents.
• Local brokers, if you use them — but remember they may quote higher asking prices.
• Your own tenants' feedback: what else did they look at before choosing yours?

Asking rent vs agreed rent

Advertised rents are often negotiated down. If a flat has been advertised for two months at Tk 30,000, the real market for it is probably lower. Where you can, find out what similar flats actually let for. Treat long-advertised flats as a warning, not a benchmark.

Step 3: Convert to Rent per Square Foot

Flats differ in size, so compare rent per square foot (sq ft). Divide each comparable's monthly rent by its size:

Rent per sq ft = Monthly rent ÷ Size in sq ft

Be consistent about whether service charge is included. In many Dhaka buildings service charge is separate; in others it is bundled into the rent. Strip it out so you compare rent with rent.

Step 4: Adjust for Differences

No comparable is identical. Adjust each one up or down to match your flat. The percentages below are illustrative starting points, not fixed rules — local conditions vary a lot.

After adjusting, you get an adjusted rent per sq ft for each comparable. Take the middle (median) value or a simple average, ignoring any obvious outliers.

Step 5: Check Against Your Costs

Market rent tells you what tenants will pay. Your costs tell you whether the rent is sustainable. List the annual costs attributable to the flat:

• Share of caretaker/guard salaries and common electricity (if not fully covered by service charge)
• Share of holding tax and municipal charges
• Expected repairs and maintenance (a reserve for paint, plumbing and fittings)
• Expected vacancy (for example, one month in every two years)
• Loan instalment, if the flat was bought with a loan

If the market rent does not even cover these, the problem is not the rent — it is the investment. Charging above market will not fix that; it will simply create a long vacancy.

Step 6: Check Against Property Value (Yield)

A second sanity check is the gross rental yield: annual rent divided by the flat's current market value. In Bangladesh's big cities, residential gross yields are generally described as modest compared with property prices, so do not expect rent alone to give a high return. The point here is not to hit a target figure, but to notice if your planned rent is wildly out of line with value. For a deeper look at this, see rental yield vs capital gain. This is general educational information, not investment advice.

Worked Example: Pricing a Flat in Mirpur

For example (illustrative): Your flat is 1,200 sq ft, 3 bedrooms, 3 bathrooms, 5th floor with lift, line gas, full generator backup, no parking, recently painted with new bathroom fittings. You find four comparables nearby (all figures illustrative and with service charge removed):

Check the arithmetic for comp A: 22,000 ÷ 1,100 = Tk 20.00 per sq ft; plus 12% = 20.00 × 1.12 = Tk 22.40.

The adjusted values are 20.24, 21.00, 22.00 and 22.40. The average is (20.24 + 21.00 + 22.00 + 22.40) ÷ 4 = 85.64 ÷ 4 = Tk 21.41 per sq ft. The median (middle two averaged) is (21.00 + 22.00) ÷ 2 = Tk 21.50.

Applying Tk 21.50 to your 1,200 sq ft: 21.50 × 1,200 = Tk 25,800 per month. A sensible asking rent would be around Tk 26,000, with room to settle at Tk 25,000–26,000 for a reliable family tenant on a longer agreement.

Now the cost check. Suppose your annual costs for this flat (share of staff, common electricity, holding tax, repair reserve) are about Tk 60,000, and you expect one empty month every two years (half a month per year, about Tk 13,000). At Tk 25,800 × 12 = Tk 3,09,600 a year, your net before loan and tax is roughly 3,09,600 − 60,000 − 13,000 = Tk 2,36,600. If that meets your expectations, the rent is both market-based and sustainable.

Service Charge, Utilities and Advance: Price the Whole Package

Tenants look at the total monthly outgoing, not just the rent line. A flat at Tk 24,000 plus Tk 4,000 service charge competes with a flat at Tk 27,000 including service charge. When you compare and advertise:

• State clearly whether service charge is included and what it covers (guard, lift, generator, cleaning, common light).
• State how electricity, gas and water are billed — prepaid meter in the tenant's name, sub-meter, or fixed.
• State the advance or security deposit. A very large advance demand can put off good tenants even if the monthly rent is fair.

For how advance and deposits are usually handled, see advance rent and security deposits in Bangladesh.

Timing, Season and Demand

Demand for flats in Bangladesh is not flat through the year. Many families prefer to move at the start of the school year or around the year end, and there is often movement after Eid. A flat that becomes vacant in a slow month may need a slightly more competitive rent or more marketing effort. On the other hand, near new offices, universities or hospitals, demand can stay strong all year. Watch how quickly flats around you are being taken; if to-let signs stay up for months, the market is softer than the asking rents suggest.

Negotiating Without Losing a Good Tenant

Once you have a fair figure, decide in advance three numbers: your asking rent, your target rent and your walk-away minimum. Negotiation in Bangladesh is normal and expected, and a tenant who bargains is not being rude. What matters is that you negotiate on terms, not just on the headline figure.

• Trade rent for commitment. A slightly lower rent in exchange for a two-year agreement often beats a higher rent with a tenant who may leave in eight months.
• Trade rent for advance terms. If a tenant cannot pay a large advance, you might accept a smaller advance at the full rent, or a larger advance adjusted over time at a slightly lower rent — whatever suits your cash needs.
• Trade rent for responsibilities. A tenant willing to handle minor repairs or accept the flat "as is" may justify a small discount.
• Put the agreed review in writing. If you accept a lower starting rent, agree on when and how the rent will be reviewed, so neither side is surprised later.

Tip: When a tenant says "the flat on the next road is cheaper", ask politely what it includes. Often the cheaper flat has no generator, no lift or a separate service charge. Explaining your figure calmly is more persuasive than simply refusing.

Common Mistakes When Setting Rent

• Copying the neighbour's asking rent. Asking rent is not agreed rent, and the neighbour's flat may be quite different.
• Pricing for your loan, not the market. Tenants do not care about your EMI. If the market does not support it, a high rent just means a long vacancy.
• Ignoring the cost of vacancy. A flat at Tk 28,000 empty for three months earns less over a year than one at Tk 25,000 let immediately: (28,000 × 9 = Tk 2,52,000) vs (25,000 × 12 = Tk 3,00,000).
• Hiding charges. Adding surprise service or "maintenance" fees after agreement damages trust quickly.
• Setting different rents for similar tenants for unfair reasons. Pricing should be based on the flat, the terms and the tenant's reliability, not on religion, ethnicity or other discriminatory grounds.
• Never reviewing rent. Rent left unchanged for many years often falls well below market; reviews should be planned and in line with the agreement and law.

A Quick Fair-Rent Checklist

1. List your flat's facts (size, floor, lift, gas, generator, parking, condition).
2. Collect 5–8 comparables with actual rents where possible.
3. Remove service charge so you compare like with like.
4. Calculate rent per sq ft and adjust for differences.
5. Take the median adjusted rate and multiply by your size.
6. Check the result against your annual costs and expected vacancy.
7. Check the gross yield is not wildly out of line with value.
8. Decide the asking rent and your walk-away minimum.
9. Write the rent, service charge, advance and review terms clearly in the agreement.

Final Thoughts

A fair rent is one you can explain: "similar flats nearby let for about this much per square foot; ours has a lift and a generator; this is what it costs to run." When you can explain your rent like that, tenants negotiate less, stay longer and pay more reliably — which is usually worth more than squeezing out an extra thousand taka a month.

Once the flat is let, keeping the rent, advance, service charge and payment history in one place makes the next review much easier. Bariwala ERP (বাড়িওয়ালা ERP) keeps unit-wise rent and tenant records, generates monthly invoices, tracks dues and produces income and expense reports, so you can see at a glance how each flat is really performing.