Avoid­ing voids pays for savvy land­lords

Buckinghamshire Advertiser - - BUCKS PROPERTY -

WHEN man­ag­ing a res­i­den­tial rental in­vest­ment, whether a large port­fo­lio or a sin­gle ex-fam­ily home, it is vi­tal to un­der­stand the re­la­tion­ship be­tween void pe­ri­ods and the over­all an­nual re­turn.

Very lit­tle proves to be more threat­en­ing to the over­all net yield than the prospect of a large void pe­riod.

To give con­text, for ev­ery month a let­tings prop­erty sits empty a land­lord could drop their ask­ing price by 8% and be no worse off, says let­tings in­vest­ment and prop­erty ex­pert, Sav­ills.

Claire Pin­cott, head of Sav­ills Bea­cons­field and Amer­sham let­tings, com­ments: “Whilst we are an­tic­i­pat­ing an up­lift in de­mand – es­pe­cially in the first six months of 2015, cur­rent af­ford­abil­ity con­straints mean that the cur­rent let­tings mar­ket place is price sen­si­tive with the num­ber of in­creas­ingly dis­cern­ing ten­ants steadily grow­ing.

“As a re­sult, prop­er­ties that are over-priced or not pre­sented in the best pos­si­ble way, are likely to re­main un-let – some­times for a pro­longed pe­riod of time.

“Whilst there is al­ways the temp­ta­tion to try the mar­ket out to se­cure the high­est pos­si­ble price, the most savvy of land­lords take into ac­count the full pic­ture, in­cor­po­rat­ing how much it costs for a prop­erty to re­main empty.

“This in­cludes the monthly amount of rent sac­ri­ficed for void pe­ri­ods which, in rent alone, on a monthly ba­sis is the equiv­a­lent of a re­duc­tion of the ask­ing price by 8%; the cost of coun­cil tax (which is now in most cases payable ir­re­spec­tive of whether or not a prop­erty re­mains empty); not to men­tion the ad­di­tional costs of heat­ing, se­cu­rity, main­te­nance and so on.

“For the majority, it is of­ten more ben­e­fi­cial to take a lower monthly rent once the cost of ac­cu­mu­la­tive out­go­ings have been cal­cu­lated, as­sum­ing of course that such lower rent en­ables quicker oc­cu­pancy.”

UN­WANTED VOID PE­RI­ODS: Claire Pin­cott, head of Sav­ills Bea­cons­field and Amer­sham let­tings, ad­vises low­er­ing rent in some cases to help to en­sure quicker oc­cu­pancy

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