Avoiding voids pays for savvy landlords
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