£5k is based on other similar domains and earnings, it is quite possible to get it earning 10-15k pa and generally domains of this nature are dev'ed with a profit share agreement - thus me taking the 'low' and going 50 : 50 on it
I agree over valuation does kill domain sales and also deludes people into thinking they are sitting on a gold mine, however if this is a 'proper' rental the figures would add up, but if its Dave from the local school trying it on then its not going to happen
Incidently I have almost rented a couple of names but opted for final sales (for lesser cash) as I was not 100% happy with the whole setup ie. bloke renting uses X.co.uk and 2-3 years time can DRS / get legal to claim name etc. Lots of hassle.
I havent had coffee yet so wont attempt the rest of the reply but if I read it right there is £5k on offer that is very doable